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		</div><p><a href="http://londonglossy.com/wp-content/uploads/2011/01/sales-figures-slow-after-vat-rise.jpg"><img class="alignnone size-full" title="A survey showed sales slowed in January despite widespread discounting" src="http://londonglossy.com/wp-content/uploads/2011/01/min-sales-figures-slow-after-vat-rise.jpg" alt="A survey showed sales slowed in January despite widespread discounting"/></a></p>
<p>The reduced spending power of UK households has been highlighted after a survey showed sales slowed in January despite widespread discounting.</p>
<p>The balance of retailers who said they sold more goods than a year ago declined to 37% in January from 56% in December as the switch in VAT from 17.5% to 20% earlier this month hit sales, according to the CBI&#8217;s distributive trades retail survey.</p>
<p>The survey dampened hopes that January would see the retail sector bounce back from its worst performance on record in December when snow caused widespread disruption on the high street.</p>
<p>Retailers expect growth to slow further in February, with the balance expecting an increase in sales falling to 25%, as the CBI warned that tough times lie ahead as wages fall further behind price rises.</p>
<p>CBI chief economic adviser Ian McCafferty said: &#8220;The lure of seasonal sales and price discounting may have helped mitigate some of the impact of the VAT increase on volumes.</p>
<p>&#8220;However, retailers expect the pace of sales growth to slow further next month, and orders placed with suppliers have flattened out.</p>
<p>&#8220;Consumer demand is expected to be weak in the coming months, as the spending power of households is hit by a combination of sharply rising prices and weak wage growth. Retailers can expect a challenging period ahead.&#8221;</p>
<p>The ONS recently reported that December&#8217;s sales volumes fell 0.8%, as consumers were deterred from visiting the shops by the Arctic weather.</p>
<p>The CBI survey is considerably more optimistic than the official data but still suggests a dramatic slow-down in January.</p>
<p>Sales of grocery items, clothing, footwear and leather saw the strongest growth in January, while the weakest sector was durable household goods which saw sales fall &#8220;particularly sharply&#8221;.</p>
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