UK retail sales drop in January

Retail sales were down 1.8 percent in January, with sales of clothing and household goods down especially sharply, according to new data from the Office for National Statistics. The decline came despite lower prices, down an average of 0.4 percent than the same period in 2006, and in the face of an expected slight rise. The drop in sales was the steepest in four years, and have led to lowered expectations for a rise in interest rates anytime soon. This is especially the case in light of a separate report that showed house prices growing more slowly in January than they have in several months.

Sales of clothes dropped by 4.4 percent, according to the new data, while household good sales was down by 4.2 percent. Other non-food stores saw sales decline by 3.7 percent during the month. While accounting for just 4 percent of total retail sales, internet sales were up by 17.7 percent in January.

Analyst reaction to the new numbers was mixed. Some pointed out that stronger sales over the Christmas period just past - sales in December were up by 1.1 percent - softened the impact of the January declines. On the other hand, some analysts worried that January’s data would hurt first quarter economic growth.

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