RETAIL sales volumes rose by much less than expected in December as a large rise in prices deterred shoppers from splashing out over Christmas, official figures have shown.
The Office for National Statistics said the figure rose just 0.3 percent last month, less than the 1.1 percent analysts had expected and the weakest for the month of December since 2007.
On the year, sales volumes were up 2.1 per cent, also weaker than the 3.0 percent expected and the lowest annual rate for a month of December since 1998.
The pound fell and gilts rose as analysts had expected a strong number on the belief that consumers would bring forward big-ticket purchases before the temporary cut in value added tax was reversed on 1 January.
Vicky Redwood at Capital Economics said: "December's modest rise in UK retail sales is disappointing given the far more upbeat tone of the surveys and trading updates. Vicky Redwood at Capital Economics.
"They are clearly a timely reminder that, with a fiscal squeeze looming and renewed falls in house prices and employment potentially on the cards, consumers shouldn't be relied on to drive a strong economic recovery."