Sector: Retail

Official figures show that dire winter weather and freakish snowfall caused a disappointing 1.8 per cent decline in retail sales between December and January, the sharpest dip in 18 months and a fall more than three times as marked as analysts had expected.

Although unseasonably heavy snow played a major role in the retail malaise, the latest data released by the Office for National Statistics (ONS) only adds to concerns about the fragile nature of the UK’s economic recovery.

The period covered the first month since VAT returned to 17.5 per cent, following its temporary reduction to 15 per cent in a Government move that met with a lukewarm response from many in business circles. With some sales brought forward to December to beat the VAT rise, this is thought to have damaged the January figures.

Coming on top of news of 3.5 per cent inflation and an unexpected rise in the number of people claiming Jobseeker’s Allowance, January’s retail statistics rounded off ‘a pretty awful week for news on the UK economy’, according to Jonathan Loynes, chief European economist at Capital Economics.

‘We knew the January sales figures would be bad after the VAT rise and bad weather,’ he added. ‘But the drop is even worse than the retail surveys had suggested. At the very least, the numbers provide a very weak platform for sales in the first quarter of this year and therefore raise the chances that the economy may succumb to a double-dip.’