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Thursday, May 20, 1999 Published at 11:28 GMT 12:28 UK

Business: The Economy

Shop sales stall

Shoppers appear to have deserted the High Steet

The wariness of shoppers when it comes to spending too much money has continued with the latest set of sales figures from the UK's high streets.

Retail sales in April fell by 0.5% compared to the previous month.

It is a setback after hopes that following the dismal Christmas trading period, more people were returning to the stores and spending.

This month's slowdown was particularly marked in the clothing sector, where sales fell by 1.6%.

These new figures come as the major retail chain Storehouse announced the closure of 68 Mothercare stores with 240 job losses because of poor trading conditions.

Underlying trend

The Office for National Statistics, which compiles the figures, says that they "confirm the pick-up in underlying retail sales growth."

In comparison with one year ago, sales were 1.6% higher and March's sales figures have been revised upwards to 0.6%.

Retail sales figures are subject to considerable monthly variations, and this year an early Easter distorted the sales figures by shifting some turnover into statistics for March.

Some economists, however, said the figures pointed to the weakness of the UK recovery.

"It is a poor number but you have to take into account the sharp upward revision to the previous month. It will not do much for those who are optimistic about the growth outlook for the UK," said James Stewart of Weavering Capital.

And the shopkeepers themselves said the figures confirmed their fears.

"It is really saying much the same thing that we said earlier this month, that there is not a lot of demand out there. I would not say these figures are encouraging," said Pamela Webber of the British Retail Consortium.

Canny consumers

There have been a number of contradictory indicators relating to retail sales.

Consumer confidence appears to be growing, as new figures from the European Commission revealed.

And two industry surveys - from the CBI and the British Retail Consortium - produced different results for April.

What is clear is that consumers are seeking bargains and that stores are unable to raise prices, hurting profits during a period of flat sales and rising costs.

Some economists believe that it was an attempt by some stores to raise prices in April that hurt sales.

They argue that the sales drop is just a temporary setback on the road to recovery.

"The improvement in consumer confidence will feed through into higher spending in the shops and stores and it was largely special factors which kept retail sales down in April," said Neil Parker of the Royal Bank of Scotland.

Mixed picture

The retail slowdown is hitting some sectors harder than others.

Mail order, department store and clothing sales all fell sharply.

Food retailers saw a more modest decline in sales of only 0.7%.

And sales of household goods, like electrical equipment, actually rose by 1.7%.

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