Prices cuts drive high street sales

High Street retailers resorted to massive discounts and price cuts to boost sales in January.

08:45 18 February 2005

High Street retailers resorted to massive discounts and price cuts to boost sales in January.

The Office for National Statistics (ONS) says retail sales rose by just 0.9 per cent last month.

This was up on the revised fall of 1.1 per cent in December.

Food and household goods helped to force the increase, while sales of non-food items, such as books, toys and sports goods fell by 0.9 per cent.

The ONS's data reveals that the relatively robust growth the UK has witnesses since mid-2003 may now be grinding to a halt.

Off the back of these figures, analysts feel steady interest rate rises are likely.

However, on Wednesday this week, the Bank of England said it was not planning rises in the near future.

David Page at Investec believes Mr King does not "see consumer spending as a downside risk to their forecasts".

Speaking to the BBC he added: "The data is moving in a way that suggests that the Bank might have to tighten policy, but the weakness of consumer spending and the fragility of the housing market are reasons why the Bank would not like to hike rates."