Retail sales growth slows

(Reuters) - Retail sales growth halved last month, led by a drop in big-ticket items as uncertainty ahead of government spending cuts made consumers nervous, a survey showed on Tuesday.


Budget Clothing Line at Tesco's Supermarket. Photo : Corbis

The British Retail Consortium said retail sales values were 0.5 percent higher than a year ago in September on a like-for-like basis, down from 1.0 percent in August. Total sales, which include new floorspace, were 2.2 percent higher against 2.8 percent in August.

There was a particularly sharp drop in sales of furniture and floor coverings, something the BRC attributed to a slowdown in the housing market.

"We've now had six straight months of low growth thanks to persistently weak consumer confidence and worries about the future," said Stephen Robertson, BRC director general.

"Despite widespread discounting, sales of major items had the toughest time. It's clear people are cautious and major spending is largely on hold."

Britain's coalition government has planned a strict austerity drive over the next five years to slash a record budget deficit, raising concerns that the economic recovery could falter.

Robertson said the retail sales performance was even worse than it seemed since value-added tax is higher this year than last, inflating the value of sales.

The survey showed the onset of cold, wet weather and new autumn and winter lines lifted footwear sales, but overall growth in clothing ebbed, and the value of food sales grew only slightly, mainly from higher food prices.

The best performance came from internet, mail-order and phone sales category which enjoyed its best showing since May.

"We hold our breath as to whether the upcoming public spending review will derail current retail spending further - confidence is fragile," said Helen Dickinson, head of retail at KPMG.

(Reporting by Anna Yukhananov; Editing by Ron Askew)