Consumers 'still not spending much'

ShoppersShoppers have continued to keep their spending in check despite recent signs of hope for the UK economy, the British Retail Consortium (BRC) has said.

The trade body's February sales monitor showed the value of business was down 0.3% on a comparable basis with a year ago, the same drop as in January.

Total sales, including store openings, were up 2.3% but with inflation at 3.6% in January this still shows customers are buying less than a year ago.

The recent fall in inflation from above 5% has eased the squeeze on household finances but with fuel prices again rising BRC director-general Stephen Robertson said there was no sign of a convincing revival for shops.

He added: "Unemployment is expected to rise further, causing increased nervousness about job security, which is keeping confidence fragile. Any sense of improving optimism is not yet translating into more spending."

He repeated the BRC's calls for the Chancellor to use the Budget to hold back business costs and support jobs, growth and a consumer turnaround.

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While food sales picked up, driven by last month's stocking up of cupboard staples in the very cold weather, non-food sales were weak despite promotions and discounts. For clothing, footwear and homewares, February was worse than January and December, especially for larger purchases, the BRC added.

Online continues to grow faster than any other retail channel but the rate of increase in sales at 9.9% has slowed since Christmas and is well down on the kind of performance seen in 2010 and before.

Helen Dickinson, head of retail at survey partner KPMG, said: "Many retailers feel they're fighting very hard just to stand still at best and don't see any light at the end of the tunnel.

"However, there are retailers out there who deliver what the customer wants and needs in terms of product, brand and price, which proves that if the proposition is spot on it is still possible to outperform the market and the competition."

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