British shoppers who kept a tight grip on their spending before Christmas came back with re-doubled enthusiasm for the bargains on offer in the January sales.
National Statistics said that the seasonally adjusted volume of retail sales jumped by 0.9 per cent between December and January to a level 4.3 per cent higher than January last year.
It was the biggest monthon-month increase since September, but still failed to make good all the ground lost in a downwardly revised December. So, after seasonal adjustment, the latest three months were nor more than level-pegging with sales in August/October.
Food shops set the pace in January with a 1.5 per cent increase, along with department stores, which had suffered in the run- up to Christmas.
Only chemists, jewellers, newsagents, shops selling sports goods, photographic equipment, and floor coverings, all lumped together by NS as "other non-food stores", continued to lose ground. Their sales fell by 0.9 per cent, as they did in December.
Booming internet sales boosted the total for all nonstore retailing - the only category to show a gain in December - so that in the latest three months it was eight per cent higher over the year.
Confirming the extent to which bargain-hunting drove last month's recovery, NS reported prices were 1.5 per cent below those in January last year, outstripping a
1.3 per cent dip in December.
NS said the relatively robust growth since mid-2003 appeared to have come to a halt in recent months. The three-month reading for all retailing, which smooths out volatility, was unchanged between August/October and November/January.
The quieter trend was confirmed by Gerry Murphy, chief executive of Kingfisher, parent company of the B&Q DIY chain whose sales dipped by 1.2 per cent in the final quarter of last year.
"Things have been relatively soft in terms of footfall," he said. "Average transaction values held up pretty well, but are being supported by promotion.
"It's a very price-driven market and customers are shopping around on value."
The average weekly unadjusted value of all retail sales in January was £4.4 billion, up 2.2 per cent on January last year and the weakest gain since November, 2003.
The data is unlikely to settle the debate over whether the next move in interest rates is up or down as policymakers have pointed out that Christmas and New Year figures can be very volatile.
"Bank of England governor Mervyn King warned us against reading into sales data too much," said Mark Miller, economist at HBOS Treasury.
Still, policymakers will be relieved that sales did recover as the BoE warned on Wednesday that a potential weakening of consumer spending was the greatest downside risk to their latest set of economic forecasts.
Investec's Philip Shaw said the figures seemed impressive, but still suggested high street activity was slowing.
"We stand by our view that we are probably at the peak of the rate cycle and that base rates will remain at 4.75 per cent for the remainder of the year," he said.