Retail fears scotched - but will it last?

ONCE again, consumers appeared to spend in record numbers and by record amounts this Christmas, with the winners outgunning the losers on the high street.

But this week's surprise quarter-point interest rate rise could yet fuel concerns that the consumer spending spree was only short-lived.

A last-minute shopping surge in the final week before and immediately after Christmas helped boost flagging sales and rubbished early fears that the festive season would be the worst for 25 years.

But many are already putting the seasonal success down to a lucky combination of the right weather, early promotional discounts and City bonuses - a "two week wonder", as Alliance Boots chief executive Richard Baker said on reporting the group's Christmas results this week.

Few expect the sector's 2.5 per cent like-for-like increase on December 2005 to reflect a continued upward trend throughout the rest of 2007 as households feel the squeeze of the recent quick succession of interest rate rises and fuel bill hikes.