High street hit by worst Easter trading since Second World War

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The Independent Online

Retailers have suffered their worst Easter since records began after the Second World War, according to official figures showing consumers have kept a tight hold on their purses and wallets over the past three months.

Retailers have suffered their worst Easter since records began after the Second World War, according to official figures showing consumers have kept a tight hold on their purses and wallets over the past three months.

The value of sales passing through high street tills over the three months to May grew at an annual rate of 0.9 per cent, the Office for National Statistics said yesterday. There has been no weaker growth rate since it began collecting figures in 1947, its statisticians said, although they pointed out that the figures are not adjusted for periods of high inflation. Volumes of sales, which take account of prices, posted growth of 1.8 per cent over the same period, the weakest annual increase since March 1999.

The figures are the latest to point to a marked slowdown in consumer spending and follow similar data showing the high street also had a miserable Christmas.

Analysts said the figures showed the Bank of England's fears of a major slowdown in spending appeared by be crystallising, opening the door to cuts in interest rates. Rob Carnell, at ING Financial Markets, which forecast two rate cuts by the end of the year, said: "Suggestions by the Bank that the housing market no longer has such a strong effect on consumer spending seem to be well wide of the mark."

Others took comfort from the fact that volumes and value of sales were still growing and had not suffered the dramatic slump some forecasters had predicted. "It's a slowdown not a collapse," Philip Shaw, at Investec, said. "But the figures are a reminder of the degree of consumer retrenchment over the past year."

In May the volume of sales rose a meagre 0.1 per cent, leaving the annual growth rate at a six-year low of 1.8 per cent. A year ago sales were growing at a runaway annual rate of more than 7 per cent.

Sales were weak across the high street, other than in areas where retailers were prepared to make substantial price cuts. Households goods - items such as TVs and washing machines - posted the strongest rise of 0.7 per cent, but only by cutting prices by 3.8 per cent compared with a year ago.

Department stores saw a 0.4 per cent monthly drop in sales while clothing retailers posted zero growth. Nick Palmer, the ONS retail statistician, said: "A few retailers have blamed the state of the housing market. DIY stores have done the worst."

He said there was a direct relationship between prices and sales over the past three months. In March sales fell 0.3 per cent as shops raised prices by 0.8 per cent, but when retailers cut prices by 0.4 per cent the following month sales rose 0.5 per cent. He said this implied households had taken a decision to stick to tight spending limits even if prices fell.

This week a survey by Manpower, the recruitment agency, showed retailers had become markedly more nervous over their plans to hire more staff.

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