Shoppers' caution before cuts hits high street sales

Retail sales growth slowed sharply last month as demand for non-food goods slid for the first time in more than a year, according to figures today.

The British Retail Consortium said like-for-like sales grew by 0.5%, a significant drop on the 1% reported in August.

Shoppers' fears ahead of public spending cuts affected sales of "big ticket" items on the high street, with furniture such as fitted kitchens and bathrooms hit hard.

This left non-food sales in the red for the first time since August last year.

Stephen Robertson, director general of the BRC, said what growth there was largely came from food firms, which was predominantly driven by food inflation at about 4%.

"Sales growth continues to be poor. We've now had six straight months of low growth thanks to persistently weak consumer confidence and worries about the future," he said.

Robertson added there was little sign yet of shoppers bringing forward purchases to beat the VAT rise in January: "It's clear people are cautious and major spending is largely on hold."

The three-month average to September showed like-for-like food sales up 2.1% and non-food sales down 0.4%. However, the falls in large item sales masked more resilient performances across clothing, footwear, health and beauty.

Food and drink retailers have been given a sales lift by the rise in price inflation, while many shops have focused on Halloween to boost demand.

Figures from Tesco, Sainsbury's and Marks & Spencer last week revealed a pick-up in sales, with second quarter food sales up as much as 3.7% at M&S and 2.9% at Sainsbury's.

But experts warned that the wider retail result showed how fragile consumer confidence is ahead of spending cuts, while rising food price inflation will weigh further on spending power.

Howard Archer, chief economist at IHS Global Insight, said: "It is likely that retail sales will benefit to a limited extent in the final months of the year by consumers looking to make purchases of more expensive items ahead of the January VAT increase from 17.5% to 20%.

"Nevertheless, the suspicion is that further out consumers are likely to find life hard and will be constrained in their spending."