Warning over retail sales

Published:  02 February, 2010

LONDON: Retailers could suffer a relapse with deteriorating trading this year, as rising taxes, interest rates and the uncertainty over the next government's economic policy takes its toll on consumer spending.

The KPMG/Synovate Retail Think Tank, in its Retail Health Index had predicted continuing improvement of retail sales into the first quarter of this year, but warned of "dark clouds gathering on the horizon" and that consumers will make 3% fewer shopping trips this year.

Nick Bubb, of Arden Partners, said: "A mini-reflationary bubble has been created. But that has to burst eventually and the 'phoney recession' that we had in 2009 will turn into the real thing at some stage this year."

Despite robust festive sales, retailers' fears over consumer spending this year were intensified by anaemic GDP growth of just 0.1% in the fourth quarter of 2009, according to the Office of National Statistics last week.

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