Retail feels the pain as nervy shoppers shun high street

Nervous shoppers are matching Chancellor George Osborne's austerity drive after a surprise fall in retail sales for the second month in a row during September.

Retail sales volumes slipped 0.2% over the month, while August's fall was also revised down to 0.7%, the Office for National Statistics said.

The worst-hit area was clothing and footwear, where sales fell 0.8% amid warnings that shoppers were being deterred by higher prices.

Recent inflation figures heralded the return of year-on-year rises in clothing and footwear prices for the first time since 1992.

Barclays Capital chief economist Simon Hayes said: "The data suggest price increases in some sectors is having a detrimental effect on sales volumes."

The data confounded hopes of a 0.3% rise in volumes after stronger surveys from the CBI and the British Retail Consortium, adding weight to expectations the Bank of England could vote to print more money to shore up the recovery.

Andrew Goodwin, senior economic advisor to the Ernst & Young ITEM Club, said the outlook remains "bleak for consumers" with public-sector job cuts looming and weak wage growth.

"Though January's VAT rise might bring some sales forward into the final months of this year, after that consumer demand is likely to remain soft."