High Street sales bounced back in January

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The high street enjoyed a bounceback in sales last month, official figures revealed today, but revised estimates show snow-hit December was even worse than originally feared.

Retail sales volumes declined 1.4% month-on-month in December, downgraded from a 0.8% drop, which was already the worst performance on record for the month, the Office for National Statistics (ONS) said.

But sales rebounded in January, growing by 1.9%, as shoppers returned to the high street after being trapped at home by the severe weather and to beat the VAT hike from 17.5% to 20%.

UK retailers had a torrid festive season as Arctic conditions gripped the country, with big players such as Next and HMV reporting a slump in sales.

The ONS said the sales volumes in December were revised so severely because a large number of late responses were received from retailers.

The revised figures still showed food stores were the biggest losers in December, declining by 1.9% month-on-month, downgraded from a 0.9% drop in the first estimate.

As well as the heavy snowfall and icy conditions, high prices were blamed for weak sales volumes over the festive period, which soared 5% in December.

The ONS said price growth moderated last month, increasing by 2.7%, as retailers rolled out their January sales.

Department stores were the biggest winners last month, with volume growth of 5.7%, but the ONS said anecdotal evidence suggests the sales volumes peaked in the first week ahead of the VAT hike on January 4.

But the ONS urged caution over the significance of January's volumes growth.

Kate Davies, statistician for the Retail Sales Inquiry at the ONS, said: "The month-on-month growth of 1.8% in January followed a decline in retail sales of 1.4% in December.

"The underlying picture may therefore be better considered by noting that a 1.9% growth in January and a decline of 1.4% in December combines to give a 0.5% increase over these two months combined."

Last month, official figures revealed a weak services sector, which includes retail, led the economy into an unexpected decline in the final quarter of 2010.

The ONS said it was difficult to determine the impact the downgraded December figures would have on the fourth quarter GDP estimate, which will also be revised next week.

Vicky Redwood, senior UK economist at Capital Economics, said the combined picture of December and January showed "positive, but unspectacular, underlying growth".

She said: "What's more, other evidence suggests that after a strong start to January, spending growth has slowed to pretty sluggish rates and has yet to recover.

"Accordingly, we wouldn't take January's rise in sales as evidence that the consumer recovery is firmly back on track.

"Indeed, with real household incomes set to fall significantly this year, we find it hard to see consumer spending doing at all well."