Clothes stores drive retail sales higher

But best October figures since 2002 are 'flattered' by comparison with last year

The best October retail sales since 2002 provided further evidence that consumer confidence is improving ahead of the crucial Christmas trading period, but the figures were flattered by "dreadful" trading last year when the banking crisis gripped the nation.

The star performers were shops selling children's and women's clothes, footwear, furniture and homewares, but grocery sales slowed again as food price inflation fell.

Like-for-like sales jumped by 3.8 per cent and total sales were up by 5.9 per cent over the month, the latest British Retail Consortium-KPMG Retail Sales Monitor found.

Stephen Robertson, director general of the BRC, said the data was "encouraging" but it compared to "dreadful figures last year when the final three months were all negative". "Shops have already started to battle it out for customers with a string of promotions and discounts," he added. For a second month running, non-food sales outperformed groceries. Footwear sales were the best since April.

Children's clothing outlets enjoyed a big boost from half-term spending and Halloween, but the BRC said sales were buoyed by promotions and mid-season discounts as the mild autumn weather hit winter clothing figures.

Growth in food sales fell to its lowest for 19 months, dragged down by tumbling food inflation. Over the three months to October, like-for-like food sales dropped back to 2.6 per cent, but non-food sales rose again to 2 per cent.

The postal strikes seemed to have little impact on online and catalogue retailers, whose October sales were 18 per cent higher than a year ago.

Sharon Hardiman, the head of non-store retailing at the BRC, said: "The third best sales growth this year in online and mail order sales of non-food suggests the Royal Mail strike did not hit confidence in this form of shopping as retailers assured customers other delivery options were being used." But Helen Dickinson, the head of retail at KPMG, warned: "The longer-term outlook remains considerably more challenging, given the economic backdrop, levels of unemployment, uncertainty regarding the impending VAT rise and the impact of future fiscal policy following next year's election."

Retail restructuring firms do not expect a wave of insolvencies before the 25 December quarterly rent day, partly as more retailers are now on monthly rents, but forecast more failures from the end of January.

Neil Bennett, a director at Leonard Curtis, said: "Next year, I think it is going to be the smaller retail operations which have up to about 30 stores that are going to suffer a bit more, rather than the big ones."