Warnings persist despite retail sales rise

Friday 20th February 2009

Consumer spending is still expected to suffer in 2009 despite official figures for January revealing a surprise rise in retail sales.

According to the Office for National Statistics (ONS) high street sales were up 0.7 per cent in January compared to December and 3.6 per cent against January 2008.

The ONS said the rise was driven by a monthly 6.1 per cent increase in clothing and footwear.

"The relatively healthy rise in retail sales volumes in January does little to dispel belief that consumer spending will be extremely weak through 2009," said Howard Archer, chief UK and European economist at IHS Global Insight.

"Indeed, the increase in sales in January is fully consistent with the view that increasingly cash-strapped and pressurised consumers are looking to concentrate their spending when they can get the best value for their money."

David Kern, chief economist at the British Chambers of Commerce, added: "These better than expected retail sales figures may still be distorted by heavy end of year discounting. Nevertheless, they show a possible resilience in consumer spending which needs to be nurtured.

"The underlying recession remains serious and without continued corrective action there is a risk that any improvement will fizzle out.

"UK retailers face a considerable regulatory burden which should be eased to ensure that any improvement in sales can be sustained."

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