Business

UK retail sales fall by more than expected in February

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Image caption The sales figures were below analysts' forecasts

The volume of UK retail sales fell by more than expected in February, dropping by 0.8% on the previous month.

It came as High Street retailer Next warned of very challenging times ahead for retailers and consumers.

The Office for National Statistics said the drop in sales had been broad-based, with only car fuel and non-store retailers seeing sales grow.

And it revised downwards the figure for January, with the volume of sales increasing by 1.5% rather than 1.9%.

'Disappointing figures'

On an annual basis, the volume of sales was up 1.3% across the year.

Analysts had expected a drop of 0.6% on the month and an annual rise of 2.3%.

"These disappointing figures highlight the fragility of Britain's economy," said David Kern, chief economist of the British Chambers of Commerce.

"With the government persevering with austerity measures, it is clear that businesses and consumers will face many pressures in the months ahead."

It comes a day after Chancellor George Osborne said the 2011 forecast for UK gross domestic product growth would be 1.7%, down from a previous estimate of 2.1%.

'Work hard'

Earlier in the day, retailers Kingfisher and Next had reported higher profits, but warned that the immediate outlook was rocky.

"Retailing will feel like walking up the down escalator - we will have to work hard to stand still," said Simon Wolfson, the boss of Next.

He said he expected the consumer environment to be "somewhat more challenging" this year than last year.

And Ian Cheshire, the chief executive of B&Q-owner Kingfisher, said he saw "no let-up in the challenging environment in the short-term", but added that he was excited by the firm's ultimate prospects.

The firm said it had undertaken a number of cost-saving efficiencies in the past year.

'Retrenchment'

The figures will add to worries about rising price pressures and weak consumer demand.

The month of February also saw a record-breaking 2.4% monthly hike in the average prices of non-fuel retailers.

"The problem facing the High Street is that the cost of living for the average customer is going up more than wages are," said retail analyst Rahul Sharma.

"It is not surprising that we are seeing the consumer retrench."

He said there were some small signs of hope for consumers, with council tax being frozen and the fuel price escalator being scrapped in the 2011 Budget.

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