Unhappy new year as shop sales fall

Published on Thursday 20 February 2003 00:00

HIGH street sales tumbled in January as shoppers tightened their purse strings following the Christmas rush, according to figures released today.

The Office For National Statistics said retail sales volumes fell one per cent in the four weeks between January 5 and February 1 - the biggest monthly fall for more than a year.

The figures showed a reversal of a strong surge seen in December as shops started their sales early to lure in customers.

While shoppers spent 29.2 billion in December, they parted with just 16.5bn in January.

Meanwhile the Council of Mortgage Lenders said 9.6bn was advanced for remortgaging during the month, making up 52 per cent of total lending, as consumers continued to take advantage of low rates.

But overall lending showed a slight seasonal dip, with a total of 18.6bn advanced, the lowest figure since June 2002 and down from 19.4bn the previous month.

The British Bankers’ Association also reported a gradual slowdown in lending to consumers, with total advances for both mortgages and unsecured borrowing falling to 6bn in January, down from a high of 6.4bn in November.

Credit card lending increased by 404 million during January, its strongest monthly rise since May 2000, the BBA said. But other lending, such as personal loans and overdrafts, rose by just 226m, the weakest increase since October 1999.

Economists had expected retail sales to fall back in January, but the decline was larger than expected, and the fall was driven by a drop in sales at non-food stores - household goods shops saw trading fall 1.6 per cent, while clothing shops declined 0.9 per cent.

The monthly decline pushed year-on-year sales growth down to 4.2 per cent, compared with the six per cent recorded in December.

But the Scottish Retail Consortium said yesterday that high street spending had accelerated north of the Border. The SRC said total retail sales growth in Scotland came to 5.1 per cent last month, higher than the 4.9 per cent growth recorded in December.