British retail sales fall for second month in row

British retail sales fell for the second month in a row in January, confounding expectations for a strong bounce back, official…

British retail sales fell for the second month in a row in January, confounding expectations for a strong bounce back, official figures have showed.

The weak sales numbers fly in the face of anecdotal evidence that retailers enjoyed a bumper festive season, but will allay some fears at the Bank of England over the strength of consumer spending.

National Statistics (NS) said today that retail sales volumes fell by 0.3 per cent in January, while sales for December were revised down to show a fall of 0.4 per cent compared with an original drop of 0.3 per cent.

Statisticians said this was the first time sales had fallen for two successive months since September-October 1998.

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The drop left the annual rate of increase in January at 4.2 per cent, the weakest in a year, down from 5.6 per cent in December.

Economists expressed puzzlement over the latest figures, which had been expected to show a 0.6 per cent bounce back in sales volumes in January.

"All the surveys tell us that spending is strong and for the second month in a row the official statistics have thrown a spanner in the works," said Geoffrey Dicks, economist at the Royal Bank of Scotland.

"It certainly makes any talk of a rate hike several months away," he added.

The latest numbers took the markets equally by surprise, with sterling shedding a third of a cent against the dollar to $1.4246, and government bonds and short-sterling futures rallying sharply.