Retailers down but consumers upbeat

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RETAIL SALES suffered an unexpected fall last month but confidence rose sharply among consumers and home buyers, according to the latest batch of mixed figures for the new year.

The number of retailers reporting a fall in sales outnumbered those seeing a rise by 3 per cent, the worst January for six years according to the CBI,

The employers' group said this was a sharp drop from the strong balance of plus 33 per cent in December and reinforced its call for interest rates to stay on hold. "January has proven slightly disappointing for many retailers, after the mixed performance in the run-up to Christmas," Ian McCafferty, its chief economic adviser, said. "The Bank is likely to want more evidence before changing its stance on interest rates."

The message from the survey was contradicted by three surveys on confidence. The main measure of optimism among consumers rose to a two-year high. GfK Martin Hamblin, an analysis firm, said the change was mainly driven by a greater willingness among households to make a major purchase. "There is probably a bit of new year optimism contributing to the improved consumer mood at the start of 2005," Reza Chady, a GfK director, said.

Perceptions of people's own personal finances and the general economic situation improved, according to results of a poll of more than 2,000 people. A similar-sized poll for Lloyds TSB found that three-quarters were at least secure about their employment prospects as they did 12 months ago. Meanwhile said the number of house hunters expecting prices to rise had risen.

More than half of those polled forecast continued increases in prices compared with 30 per cent in December. It is the most positive reading since June last year.