Retail sales growth slows on fears of government cuts

Image caption, Food sales were resilient in July but non-food retailing had a poor month, the BRC said

Retail sales growth slowed down sharply in July as fears over government spending cuts knocked consumer confidence, a trade body has said.

Like-for-like sales rose 0.5% compared with July 2009, down from a growth rate of 1.2% in June, the British Retail Consortium (BRC) said.

Shoppers shunned high-value "big ticket" items in particular.

Separate figures released on Tuesday also suggested that house prices are starting to fall.

The Royal Institution of Chartered Surveyors said that although most surveyors saw no change in the past three months, those seeing a fall in prices outnumbered those reporting a rise for the first time since July last year.

'Unsettling talk'

Retail sales have suffered since the end of "World Cup boost", the BRC said, with TV sales slowing in particular.

Food sales growth picked up, but the BRC said this was largely because of a smaller gain a year ago.

Internet, mail-order and phone sales showed the weakest growth for almost a year.

"Talk of public spending cuts is unsettling customers and they are concentrating on essentials," said Stephen Robertson, director general of the BRC.

"It's clear the recovery continues to need support. The Bank of England must resist pressure to increase interest rates too soon."

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