Festive blow for stores as tills failed to jingle

The Office for National Statistics (ONS) said retail sales volumes fell 0.1 per cent month-on-month and were just 0.3 per cent higher than a year earlier.

This dashed City expectations for a modest rise and reinforced fears that the first estimate of GDP for the final three months of 2012, due next Friday, will show the UK is halfway towards a triple-dip recession.

While the high street continued to struggle, prompting the likes of HMV and Jessops to call in administrators, firms with strong internet operations benefited from the roll-out of shopping apps for users of smartphones and tablet computers, as well as the development of click and collect services.

Internet sales accounted for 10.6 per cent of all sales in December, an increase of 1.2 per cent on the previous year.

With inflation at 2.7 per cent in December and wage growth much weaker than this rate, yesterday’s figures showed many Britons reined in their spending over the Christmas period.

This impacted on sellers of household goods, such as electrical appliances, furniture, hardware and music and video, as volumes declined three per cent in the biggest fall since January 2010. As noted in recent trading updates from John Lewis, Debenhams and House of Fraser, department stores weathered the storm and posted a 0.4 per cent rise in sales volumes in the ONS data. Clothes and shoe store volumes were up 0.7 per cent.

But many retailers refused to be panicked into unplanned price discounting in a bid to preserve their margins.

Some retailers have enjoyed strong trading, with budget fashion chain Primark reporting a 25 per cent jump in sales, while catalogue giant Argos posted a 2.7 per cent rise in like-for-like sales.

PC World and Currys owner Dixons benefited from the demise of Comet, posting an eight per cent rise in UK and Ireland sales, while clothes and homewares giant Next also reported strong sales growth over Christmas.

Vicky Redwood, chief UK economist at consultancy Capital Economics, said: “Nonetheless, it is hard to see consumer demand improving soon.”