Christmas sales slip

18-01-2008

Christmas sales slip
Retail sales worsened from November to December, official figures show.

The Office for National Statistics (ONS) said total sales volume fell by 0.4 per cent between the two months, indicating a disappointing festive season for Britain's shopkeepers.

Individual companies' trading statements suggest the non-food sector was especially badly hit, suffering a 0.9 per cent fall, while food sales were up by the same amount.

Textile, clothing and footwear sales were at their lowest 12-monthly growth since February 2009, having increased by just one per cent.

Analysts say the expected economic slowdown due in 2008 had already begun in the final quarter of last year, as falling house and equity prices combine with rising utility costs and relatively high interest rates.

Tighter lending practices caused by the collapse of the US subprime market and subsequent global credit crunch are having a wider negative impact, raising the likelihood that the Bank of England will cut interest rates again next month.

Vicky Redwood of Capital Economics said: "The monetary policy committee (MPC) is wary of taking the sales figures at face value until it knows what happened in the January 'sales' too – but surely this is enough to cement a February rate cut and more cuts thereafter."

After cutting rates to 5.5 per cent in December the MPC voted for a hold earlier this month, defying moderate expectations of a second successive reduction.

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