Page last updated at 12:43 GMT, Wednesday, 27 January 2010

Retail sales fell in January, says CBI

Shoes on sale
Footwear retailers saw a strong annual sales increase

UK High Street sales fell at their sharpest annual rate for five months in January, according to a survey by the CBI business group.

Some 28% of retailers said sales had risen in the past year, while 36% said it had dropped. The resulting balance of -8% was worse than forecast.

The rise in VAT and the cold weather cut consumer demand, the survey said.

The results comes a day after figures showed the UK emerged from recession in the last three months of 2009.

However, the weaker-than-expected growth of 0.1% in the fourth quarter of last year has raised concerns about the pace of the UK's recovery.

The recovery through 2010 is likely to be tentative and weak
Andy Clarke, CBI distributive trades panel

"The CBI distributive trades survey... reinforces the heightened concerns over the strength and sustainability of the recovery," said Howard Archer, chief European and UK economist with IHS Global Insight.

"Households face still very challenging conditions, notably high unemployment, low earnings growth, high debt levels, January's VAT hike and the prospect of further fiscal tightening ahead that will very likely include further tax hikes."

The CBI survey found that grocers and footwear retailers were the only sectors to see a strong annual sales increase in January.

Sales of more expensive household goods, furniture and carpets saw a drop after three consecutive months of growth.

"2010 has opened on a weak footing," said Andy Clarke, chairman of the CBI's distributive trades panel.

"But the picture should stabilise in February. Overall, the recovery through 2010 is likely to be tentative and weak with a long road to recovery, and consumers are still cautious about spending," he said.

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