Page last updated at 15:18 GMT, Friday, 22 January 2010

UK retail sales rise 0.3% in December

Shoppers on Oxford Street in London
Consumers bought less than expected in December

UK retail sales rose by just 0.3% between November and December, according to official figures.

The rise in sales volumes in the run-up to Christmas was lower than expected, with analysts having predicted a rise of more than 1%.

Rising prices were blamed for the slow increase, with prices increasing at their fastest rate in nine months.

As a result retail sales by value were stronger in December, rising by 0.9% compared with November.

Consumers shouldn't be relied on to drive a strong economic recovery
Vicky Redwood, UK economist, Capital Economics

Sales by value were up 3.6% from December 2008.

Economists said the figures, released by the Office for National Statistics, were disappointing given the positive reports from retailers over the festive period.

There was also concern that the increase in VAT, which came into effect in January, did little to boost sales in December.

"Sales should have received at least some boost from consumers bringing forward spending ahead of the VAT rise," said Vicky Redwood, UK economist at Capital Economics.

"Without this, sales would presumably have dropped. They are clearly a timely reminder that consumers shouldn't be relied on to drive a strong economic recovery."

The biggest rise was seen in the amount of money spent on food - up 4.9% on a year earlier. Non-food spending was up 1.9%.

Online boost

Separate figures released today showed that people have been increasingly turning to the internet for their Christmas shopping.

Figures from IMRG Capgemini showed that online retail sales hit £5.46bn in December, an increase of 17% compared with the same month the previous year and up 3.8% from November.

Gifts and accessories showed the biggest jump compared with the previous year.

"2010 looks set to produce another year of strong results for e-retail, with demand expected to remain high as consumers habitually look online for best buys," said James Roper, chief executive of IMRG.

The cold weather has also boosted online sales, according to the research company GfK NOP.

A survey carried out by the company found 27% of consumers who had intended to go shopping on the High Street had turned to the internet instead because of the sub-zero temperatures.

GfK NOP director Ivan Browne said the weather conditions in the first two weeks of 2010 had a "significant effect" on retailers during the crucial winter sales season.



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