Consumers are failing to loosen the purse strings

Retail sales failed to rebound last month as the consumer spending squeeze maintained its grip, figures today suggest.

The British Retail Consortium's (BRC) latest snapshot of the UK high street shows sales values were 0.6 per cent lower on a like-for-like basis in June, compared with a year ago.

Although the figure is an improvement on May's 2.1 per cent like-for-like decline, economists described the latest result as weak. It is also likely to heighten fears that the wider economy suffered a marked slowdown in growth in the second quarter.

The BRC said underlying conditions on the high street were masked last month by a minor revival in non-food sales driven by price cuts and clearance events. Food sales growth slowed a little further, it added.

Clearance sales benefited the homeware sector more than clothing and footwear, which many people had already bought during April's record-breaking weather.

Consumer caution continued to hit big-ticket housing-related purchases, the BRC noted. Total sales, which factor in store openings and additional selling space, nudged up 1.5 per cent.

Stephen Robertson, BRC director general, said: "Given June's spate of shop-closure announcements and weak company results, these figures are not as bad as they could have been, but it shows just how tough times are when total sales growth of 1.5 per cent is regarded as not that bad."

Howard Archer, chief UK economist at IHS Global Insight, said a weak retail survey would raise fears that the total economy stagnated in the second quarter. "The likelihood is that consumer spending will be muted for some time to come," he added.