Commenting on the retail sales figures for December published today by the ONS, David Kern, Chief Economist at the British Chambers of Commerce (BCC), said:
“The fall in retail sales was largely expected, mainly because of the severe weather conditions in December. But it is too early to know whether consumers brought forward any purchases ahead of the VAT increase. Overall, the figures indicate that retailers faced intense pressures ahead of 2011 when the deficit-cutting programme was expected to take hold.
“The pressures facing businesses and consumers will intensify and with prices increasing faster than wages disposable incomes will be squeezed further. In this instance, it would be wrong to raise interest rates until the initial impact of the austerity package is absorbed. But keeping rates low is not enough. It is equally important to create conditions where retailers and other businesses are able to create jobs and drive growth.”