Retail sales fall dampens hopes of festive boost

The Christmas shopping season has got off to a slow start, with retailers reporting a fall in sales volumes in November, dampening hopes of a bumper festive period on the high street.

Figures from the Office for National Statistics (ONS) showed that retail sales volumes unexpectedly fell by 0.3 per cent in November.

Department stores saw the biggest slump in sales, and winter clothing proved particularly unpopular thanks to a mild November.

Stores are holding out for a last minute rush of shopping over the coming week, but a separate survey published yesterday showed retailers are predicting shopping activity to fizzle out once the January sales are over and VAT returns to 17.5 per cent.

According to a snapshot of sentiment from the CBI, retailers are predicting gloomy times will continue.

Chairman of the CBI distributive trades panel and chief operating officer of Asda Andy Clarke said: “With a week left to go until Christmas, retailers may yet benefit from a flurry of last-minute sales and from shoppers bringing forward spending to beat the VAT rise.

“Although individual retailers may post healthy-looking Christmas numbers compared to the same time last year when we were in the grip of the recession, conditions across the whole of the sector are likely to remain challenging in 2010.”

Year-on-year sales were up 3.1 per cent in November, according to the ONS.