"Squeeze" on Consumer Spending

Sales growth slowed in the UK last month, from 1.1 per cent over the quarter to January, to 0.9 per cent in the three months to February 2006.

Figures from the British Retail Consortium (BRC) reveal that annual like-for-like sales rose by 0.6 per cent in February, compared with the previous year, against a 0.2 per cent increase in January, though consumer spending remained sluggish after better than expected Christmas sales.

BRC director general Kevin Hawkins commented: "These results underline yet again the continuing squeeze on consumer spending and, contrary to the Bank of England's expectations, there is no sign of an upturn."

The BRC data shows that total sales in the UK, including floorspace, rose by 3.5 per cent in February 2006, slightly higher than the 3.4 per cent increase recorded in January

Particularly strong growth was witnessed last month in household spending, leisure, food and drink sales and department store sales. Valentine's Day fuelled a boost in sales of chocolates, wine and lingerie, while clothing sales, and sales of electrical and electronic goods were sluggish.

Mr Hawkins suggested that, despite Bank of England predictions, there is no clear sign of an upturn in consumer spending, housing market growth remains slow and shop price inflation remains around zero.