Retailers in the UK faced their second-worst January since the survey began in 1995 as consumers concentrated more on paying off debt and savings after raising their spending somewhat at the time of heavy discounting during Christmas.
The British Retail Consortium (BRC) reported Tuesday that retail sales value declined 0.3 percent on a like-for-like basis in January compared to January 2011, when sales had risen 2.3 percent.
On a total basis, sales were up 2.1 percent, against a 4.2 percent increase in January 2011. On both measures it was the second-worst January, after January 2010, since the survey began in 1995, BRC said.
"As 2012 gets underway, it's clear people don't feel any better about the immediate future than they did 12 months ago," BRC Director-General Stephen Robertson said. "Customers parked their worries in December and spent, encouraged by discounts. Now, in the New Year, reality has bitten again as concerns about jobs, wages and household costs reassert themselves."
Food sales slowed sharply after their Christmas boost, while non-food sales weakened. For clothing, footwear and homewares, January was worse than December, especially for larger purchases, hit by consumer caution.
"Despite consumer confidence improving in January, actual spending shows households concentrating on paying off debt, saving and battening down for another tough year," Robertson said.
According to a survey by research group GfK NOP last month, consumer confidence climbed to its highest level in seven months in January, possibly reflecting a hangover from the Christmas feelgood factor.
The Bank of England is widely expected to expand its asset purchase target to at least GBP 325 billion from the current GBP 275 billion during its upcoming policy meeting on Thursday to support the ailing economy.
The UK's economy contracted 0.2 percent sequentially in the fourth quarter after expanding 0.6 percent in the third quarter.
Meanwhile, a report from the National Institute of Economic and Social Research cautioned last week that the economy will likely return to a technical recession in the first half of this year and recommended a temporary easing of fiscal policy in the near term to revive economic activity.
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