Shoppers desert the High Street

RETAIL sales in April fell to their lowest level in ten years, sparking fresh concerns today that the consumer slowdown could lead to recession.

Figures from the British Retail Consortium show that shoppers are still staying away from the High Street. Like-for-like sales in April fell 4.7%, the biggest drop since the BRC began collating figures in 1995.

The figures are echoed by a series of downbeat financial reports. French Connection last week blamed poor consumer sentiment for persistently slow trading. Other retailers, including Boots, HMV and WH Smith have been similarly affected. And today, photography retailer Jessops reported a drop in like-for-like sales and an 18% fall in underlying first half profits.

BRC director-general Kevin Hawkins blamed the prospect of interest-rate rises for dampening consumer sentiment. He said: 'A slowing housing market, pre-election economic uncertainty and the continuing threat of interest-rate rises dominated consumer confidence in April. With figures like these, it is crucial that the Bank of England considers a gradual reduction in interest rates.'

This year's early Easter holiday, in March, has made April look worse than it did a year ago but March was up only 1.8% on the same month last year, which meant the first three months saw a decline in sales on the same period a year ago of 0.9%.

Hawkins said that sales of big ticket electrical items were down across the board, with only sales of large refrigerators apparently escaping the downturn.

Concern over consumer sentiment and how this may effect the economy as a whole is likely to have figured prominently in the latest meeting of the Bank of England's monetary policy committee. The MPC voted yesterday to keep base rates on hold at 4.75%, the ninth month in a row in which the committee has voted for no change.

The Bank will tomorrow publish its forecasts for gross domestic product (GDP). Earlier this year the Bank predicted that the economy would expand by 2.7% this year, but the falls reported by retailers and the BRC's figures today may mean its forecasts prove to be more modest this time.

The BRC report followed a survey from credit-rating company Experian which showed most consumers remained wary about making big purchases on the High Street.