John Lewis suffers its first fall in sales for two years

Sales have slumped at John Lewis for the first time in two years in another sign that the economic recovery has come to a halt.

The department store chain, which is usually seen as a bellwether for the high street, reported a 2.2% fall in takings last week compared with the same period last year. With the impact of higher VAT stripped out, the fall is 4.4%.

Apart from one "rogue" week distorted by the timing of Easter, it is the first drop in sales since January 2009, when the country was in deep recession.

All but two of its stores saw year on year falls in sales, although Oxford Street managed 1.9 per cent growth.

Economic forecasters said the figures suggested consumers were being squeezed by higher inflation and low earnings growth.

Howard Archer, chief UK and European Economist at forecasters IHS Global Insight, said: "Consumers are becoming increasingly less prepared - or less able - to spend."

"Growing concerns about the economic outlook are clearly fuelling increased caution, as is evident in the slump in consumer confidence in January."

Statisticians revealed on Tuesday that Britain's GDP began falling again in the last quarter of 2010, and consumer confidence has suffered its biggest drop since 1992.

John Lewis said snow in January last year meant that the figures were hard to compare but admitted that underlying growth was down to just 1%.

The store said: "It was a quieter week for John Lewis but the comparisons against last year are difficult to read due to periods of heavy snowfall in the first week of January last year and the resulting uplift in trade over the following two weeks.

"Taking the week ending January 15 and the week ending January 22 together provides a more realistic comparison with last year, and this gives an overall increase of 1%."

At Bluewater shopping centre, near Dartford, figures were down 10.8% on a year ago, while even the Oxford Street store - usually John Lewis's star performer - was up just 1.9%. Sales in Peter Jones, Sloane Square, crept up by 1.9%.