Chill hits high street as sales drop 0.3%

Retailers' miserable new year continued into February, according to a keenly watched survey published today showing high street sales fell last month.

The British Retail Consortium (BRC) said the volume of sales from stores open a year ago fell at an annual rate of 0.3 per cent. It was the third drop in four months. Kevin Hawkins, the BRC's director general, said: "The figures are further confirmation that trading on the high street is still tough for many, with sales falling back to pre-Christmas levels."

Including retail space opened in the past year, total sales were up by 2.9 per cent although this was well below the peak of 6.8 per cent in January 2004.

The BRC said the falls reflected the end of price discounting during the January sales and the onset of freezing temperatures and heavy snowfalls across parts of the country.

Mr Hawkins said they also showed that consumer confidence was weak and that worries over rises in interest rates and falls in house price were impacting on retail sales across all sectors. "There is every reason for an appropriate reduction in interest rates to help build confidence and ease consumers' worries," he said.

The City is likely to be cheered by the fact that the fall is much less than was speculated in some Sunday newspapers. The pound fell by a cent to the dollar on those reports.

The details of the BRC survey showed that clothes shops, department stores, DIY outlets and homewares and furniture shops suffered last month. Sales of footwear, electronics goods and leisure goods were flat.

The figures will cement expectations in the City that the Bank of England will leave rates on hold on Thursday when its Monetary Policy Committee meets.