Retail sales in the UK during January rose only 0.2 per cent on a like-for-like basis against the same period in 2005, when sales increased 0.5 per cent. This made it the weakest start to the year since the survey began in 1995.
The three-month trend of growth improved in January to 1.1 per cent from 0.2 per cent in December for like-for-like sales, but slowed to 3.4 per cent from 4.1 per cent for total sales.
Sales fell back significantly after the clearance sales ended. Food sales slowed after their Christmas upturn, and clothing and footwear also dropped back. Home and leisure remained difficult, with sales mainly discount-driven.
Underlying trade remains tough as shoppers are still cautious: although keen to take advantage of clearance promotions and discounts, they are still reluctant to commit to larger purchases.
BRC director general, Kevin Hawkins, said: "After the pre-Christmas upturn, we are now back to the reality of a tough, discount-driven retail market. The message from every sector of our industry is the same. The squeeze on consumer spending continues unabated. The economy badly needs a cut in interest rates."
At KPMG, Helen Dickinson, head of retail, commented: "Although Christmas was stronger than many had predicted, January sales marked a return to a similar trend to that seen during the rest of 2005. Most retailers approached the Christmas results announcements with a high degree of caution on the outlook for the rest of the year and this appears to have been well founded if the last month is anything to go by. It ended with 3.4 per cent total growth and 0.2 per cent on a like-for-like basis, representing the worst relative performance since last October. Women's clothing, furniture and home accessories all fared reasonably well, highlighting a high level of disparity between sector performances."
Overall, like-for-like figures remained positive which will be a relief to many."
Joscelyne Hynard, senior analyst in the BRC's Business Information Team noted that among the worst affected sectors footwear stood out: "Sales fell further below year-earlier levels and trade was tough, even in the clearance sales, where discounts drove sales in units, but not in value terms. Women's footwear was again weaker than men's and children's, with boots particularly poor," she said.
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