views

Big freeze and VAT hike hit January sales

RETAILERS suffered in Britain's big freeze as shoppers deserted the high street at the start of the year.

Figures from the CBI laid bare the grim news for shops with poor weather and the end of the VAT reduction taking their toll in January.

The monthly survey found that 36 per cent of retailers saw sales fall, while just 28 per cent reported a rise. The figures were the worst for five months.

Andy Clarke, chairman of the CBI distributive trades panel and chief operating officer of Asda, said: "The big freeze kept many shoppers away from the January sales and the VAT hike has hit bigger purchases like furniture and electricals."

He said that despite 2010 opening on a "weak footing", the picture should stabilise in February.

The survey found that grocers and footwear retailers were the only sectors to see a strong annual sales increase in January.

Howard Archer, chief European and UK economist with IHS Global Insight, said: "The CBI distributive trades survey reinforces the heightened concerns over the strength and sustainability of the recovery.

"Households face still very challenging conditions, notably high unemployment, low earnings growth, high debt levels, January’s VAT hike and the prospect of further fiscal tightening ahead that will very likely include further tax hikes."