Worst December on record for shops

The high street suffered its worst December on record last month as retailers battled with Arctic weather conditions and shoppers shunned higher prices.

Retail sales volumes declined 0.8% month-on-month - the lowest reading since records began in 1988, the Office for National Statistics (ONS) said.

Food stores saw a 3.4% drop in year-on-year sales volumes - another record plunge - as prices soared 5%, the ONS added.

Today's official figures offer a definitive view on the impact the adverse weather and economic climate had on Christmas sales, as varied trading reports from retailers such as Marks & Spencer, Next and HMV have muddied the overall picture in the sector.

High Street giant M&S and British department store favourite John Lewis reported strong sales growth earlier this month, while fashion chain Next and entertainment group HMV blamed the severe weather for a slump in sales.

In the supermarket industry, Sainsbury's led the way, with 3.6% like-for-like sales growth in the 14 weeks to January 8, while UK number one Tesco disappointed with 0.6% same-store sales growth.

But the biggest drop within overall retail sales volumes came from food, which declined 0.9% month-on-month, the ONS said.

Soaring food prices, reflected within the rising rate of Consumer Price Index inflation which stands at 3.7%, were "not helping" food retailers, the ONS said.

But companies noted a change in shoppers' behaviour during the severe weather spell - consumers were turning to local stores to buy small volumes, rather than heading to out-of-town behemoths for weekly or monthly shops.

The ONS said internet sales continued to strengthen - now constituting a record 10.6% of all retail sales - as £770 million was spent online in December.

But even internet food sales were hit by the weather, the ONS added, as retailers noted a tailing-off of sales after December 13, when reports of delayed and failed deliveries started to surface.

Household goods stores also performed badly, matching the 0.9% month-on-month decline seen in food.

The ONS said there was no evidence to suggest consumers were snapping up big-ticket items, such as televisions or fridges, ahead of January's VAT hike, as electrical appliances declined in December.

Department stores did weather the storm, and were up 0.3% month on month, with the new Xbox Kinect selling well across the sector.

The ONS noted a rise in sales volumes at sport equipment stores, which were helped by the weather as outdoor wear sold particularly well.

The volume of retail sales was also flat year-on-year, once again a record low, the ONS said. The value of retail sales rose 2% year-on-year, but declined 0.6% month-on-month.

Howard Archer, chief economist at IHS Global Insight, said the update increased the chances that GDP figures on Tuesday would undershoot his initial estimate of 0.4% growth in the fourth quarter of 2010. The UK expanded by 0.7% in the previous quarter.

He added: "December's weakness meant that retail sales volumes rose by just 0.2% quarter-on-quarter in the fourth quarter, which was down substantially from growth of 0.9% in the third quarter and suggests that overall consumer spending growth was muted in the fourth quarter."