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UK retail sales in surprise January fall

Friday, February 15 10:36:37

British retail sales unexpectedly fell in January as snowy weather hurt food stores and other retailers, reviving worries that the economy may be slipping into a third recession in four years.

Sales volumes including automotive fuel slipped 0.6 percent in both monthly and annual terms, the Office for National Statistics said today, compared to economists' expectations for solid growth in both numbers.

"This probably brings the question of triple-dip back on the table again," said Rob Wood, economist at Berenberg Bank.

"If this is the sort of disruption we see from snow and it's reflected in output in the rest of the economy, then it could be bad news for Q1," he added.

The pound hit a half-year low against the dollar and British government bonds extended gains after the data was released.

Economists taking part in a Reuters poll had forecast a 0.4 percent rise on the month in January. The ONS also revised December's numbers down.

Besides the temporary hit from poor weather, Britons' spending power has been eroded by sticky inflation in recent years.

The Bank of England warned on Wednesday that high inflation would persist much longer than forecast only three months ago, pointing to a further fall in Britons' real wages, already at their lowest since 2003. (C ) Reuters