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Christmas causes 2.2% rise in December retail sales

Retail sales bounced back strongly in December after a disappointing November, according to the latest survey by the British Retail Consortium (BRC).

However, the organisation says that this was due to the Christmas factor and that the outlook for the high street and retailers remains bleak in 2012.

Retail sales values were up by 2.2 per cent on a like-for-like basis compared to December 2010 when sales were hit by the disruption caused by snow and sales values had fallen by 0.3 per cent. Total sales were up by 4.1 per cent compared to a 1.5 per cent increase in December 2010.

Both measures show the best performance in the retail sector since January 2011. The main contributing factor to the improved figures was food sales, though there was also improvement in the non-food sector. However, all growth was led by fierce sales promotions which could affect profit margins.

Sales of big-ticket major purchases were down from a year ago, reflecting the lack of consumer confidence. Online and telephone sales increased strongly in December, up by 18 per cent, more than double the level of growth seen in November.

Stephen Robertson, Director General, British Retail Consortium, said: "A better than hoped-for December closed a relentlessly tough year for retailers, but these figures hinged on a dazzling last pre-Christmas week and were boosted by some major one-off factors. We're not witnessing any fundamental change in customers' circumstances.

“A solid December result hasn't rescued a pretty miserable year,” added Mr Robertson.

Looking ahead at consumer spending and retail trends in 2012, Howard Archer, Chief UK & European Economist for forecasters IHS Global, sounded a note of caution, saying:

“The concern is that once the best of the post-Christmas sales bargains have gone, consumers will quickly put away their wallets and purses, and undergo a significant period of retrenchment. This could weigh down heavily on consumer spending in the early months of 2012 at least and increase the already high risk that the economy could contract in the first quarter of 2012.”

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