Retail sales were unchanged between November and January compared to the previous three months according to figures released on 18th February. Interest rates and a stagnant housing market are getting the blame.
The news came the a day after the Bank of England had issued a warning that reluctance on the part of consumers to spend was now the greatest short term risk to the UK economy. Sales on the high street make up 40% of total consumer spending which in turn makes up 66% of gross domestic product (GDP). Consequently even quite minor shifts in consumer spending can have a significant impact on the economy as a whole.
The Governor of the Bank of England was wary of coming to any conclusion about the figures but other commentators remain firmly convinced that the economy is at a turning point. Unknown factors include the direction of the housing market and wage growth and possible tax increases after the general election.
The British Retail Consortium (BRC) indicated that the mood among shoppers remains very cautious especially for big ticket items and, despite prices being on average 1.5% lower than February 2004, even deep discount promotions were failing to push up sales.
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