Shopping boom grinds to a halt

THE first sign that the retail boom has come to an abrupt halt emerged today with figures showing the number of visitors to 50 of Britain's biggest shopping centres plummeted last week.

Visitor numbers in the week beginning 7 January were 9.6% lower than the previous week and 6.1% lower than the same week a year ago. The figures suggest consumers are suffering from a shopping hangover after record Christmas spending.

Ian Wilcock, business development director at FootFall, said: 'This supports speculation that the retail boom could not last. If the current trend continues, we expect the coming weeks to show a further decline in shopper numbers.'

Bank of England Governor Sir Edward George said last night the recent surge in spending may slow without higher interest rates, as a result of rising unemployment and the build-up of household debt. Today's figures suggest this could already be happening.

Meanwhile, Government figures showed inflation dived last month to its lowest since 1960. The all-items, headline rate fell to 0.7%, driven lower by cheaper mortgages following the Bank of England's half-point rate reduction the previous month.

The underlying rate, which strips out mortgage costs, ticked up from 1.8% to 1.9% and has now been below the Government's 2.5% target for four months.

Economists speculated it could fall below 1.5% by the summer, requiring Sir Edward to write an open letter to the Chancellor explaining why inflation is so low and what the Bank proposes to do about it.

'The outlook for inflation remains benign, thanks to such factors as retail competition, price transparency and falling inflation expectations,' said Deutsche Bank economist Ciaran Barr.

US retail sales deteriorated last month by much less than expected, by 0.1% against expectations of 1.4%.