Sales lure shoppers back to high street

Christmas fatigue may have deterred shoppers from splashing out on their friends and family, but the prospect of scooping a January bargain seems to have lured them back into action - at shopping centres at least.

Christmas fatigue may have deterred shoppers from splashing out on their friends and family, but the prospect of scooping a January bargain seems to have lured them back into action - at shopping centres at least.

The number of visitors to the UK's major shopping centres rose 2.4 per cent from the same week a year ago, according to the analyst FootFall. The improved picture will come as welcome relief to the country's beleaguered retailers after a tough December, which saw shopper numbers drop by 1.5 per cent. It will also heighten expectations of further interest rate rises, although the Bank of England is thought likely to leave the cost of borrowing at 3.75 per cent tomorrow.

David Smyth, FootFall's marketing manager, was pessimistic about the likelihood that the strong start to 2004 would set a trend. "However this level of activity will be under pressure as credit card bills start to drop through people's doors and the harsh realities of the total cost of the Christmas period are realised. There is no guarantee that interest rates will remain the same and are more likely to rise over the coming months," he warned.

Anecdotal evidence - buoyed by profit warnings from WH Smith and the discount retailer Brown & Jackson - suggests the high street fared badly during the festive period. Next, the fashion group that earlier this week raised its profit expectations after a good Christmas, is thought to have been the lone voice of New Year joy.

Meanwhile, two separate reports revealed that a pickup in companies' profitability was boosting the labour market and driving up wages, stoking expectations that interest rates would eventually rise.

Salaries in December rose at the fastest rate for two and a half years, while businesses hired more staff than at any time since July 2000, a report from the Recruitment & Employment Confederation and Deloitte found.

And the overall profitability of non-financial companies soared to its highest level for nearly four years, official figures showed. Profitability was 12.6 per cent between July and September compared with the 2002 average of 11.4 per cent, the Office for National Statistics, said.