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High street spending, which has buoyed the British economy in recent years, has stalled, according to official data.

Retail sales rebounded in January after a poor Christmas, but the underlying growth rate slowed to zero, the figures published on Thursday showed.

The data also confirmed there was no extra pick-up this year for the Christmas period, which determines a large chunk of many retailers’ profits.

Seasonally adjusted volumes of sales between November to January were the same as in the previous three months. In January, month-on-month sales rose 0.9 per cent, recovering from a revised 1.1 per cent fall in December, the worst since 1981.

The figures came a day after the Bank of England had warned that the main downside risk to the UK economy was sluggish consumer spending in response to a cooling housing market.

However, Mervyn King, the Bank’s governor, who would already have been aware of Thursday’s data, warned against reading too much into the Christmas figures.

“Drawing strong conclusions about spending over the Christmas period is something we should all give up for Lent,” he said, adding that the outlook was still “highly uncertain”.

However, John Butler at HSBC said on Thursday: “It’s official, retail sales were weak over the Christmas period. It is clear that retail sales growth has slowed, something interestingly the Bank of England has tried to play down.”

Mr Butler added the UK economy appeared to be at a crucial inflexion point where the pace of consumer spending depended on developments within the housing and labour markets.

“If housing transactions continue to fall, mortgage equity withdrawal will diminish, withdrawing a key source of finance for consumer spending. Alternatively if wage growth accelerates, consumer spending could gather pace,” he said.

Sterling rose marginally after the data was released because sales were slightly stronger than analysts had feared and short-term gilts moved to price in the lower likelihood of another interest rate rise this year.

Daragh Maher at Calyon said: “Despite the bounce in January, which partly retraces the setback in December, the Bank will be wary of signalling any intent to raise interest rates against such an uncertain backdrop for consumption.”

The underlying annual growth rate for retail sales slowed to 4.3 per cent, continuing a trend of steady slowdown which has been evident in the past few months. January’s rebound was led by higher spending in department stores.

Copyright The Financial Times Limited 2019. All rights reserved.

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