Comment on the Office of National Statistics (ONS) retail sales figures for January 2010

Richard Lowe, Head of Retail and Wholesale, Barclays said:

"The drop in retail sales in January comes as no surprise as consumers reined in spending after Christmas.

However, the magnitude was far greater than commentators expected.

Treacherous weather conditions deterred shoppers from the high street for part of January, although the official data suggest that even internet retailers could not escape the Christmas hangover.

In contrast, retailers of clothing saw sales volumes surge, as prices fell and appetite remained strong for winter lines.

"The post-Christmas sales meant that a number of retailers postponed the reinstating of VAT at 17.5 per cent and focused on seasonal discounts, although it remains to be seen to what extent the rise will dampen demand going forward.

There is widespread speculation amongst businesses that VAT will rise further later in the year following the general election, and retailers are already factoring this into their budgets.

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