UK retail sales drop in Jan, house prices rise

British retail sales recorded their worst performance for the month of January in at least 15 years, a survey showed on Tuesday, even as separate figures showed house prices extended their recent rise.

The British Retail Consortium said the value of sales last month was 0.7 percent lower than a year ago when measured on a like-for-like basis. That followed a 4.2 percent annual rise in December.

Total sales, which include new floorspace, rose by 1.2 percent on the year in January.

"An awful start to the year and in stark contrast to an upbeat December. This is the worst January sales growth in the 15 years we have been running the survey," said Stephen Robertson, director general of the BRC.

He said the snow at the start of the month had increased food sales but hit other sectors. Some consumers may also have brought forward their purchases to December to beat the return of value-added tax (VAT) to 17.5 percent on Jan 1 after the cut to 15 percent for 2009.

Property price rises in Britain picked up pace in January, even though Britain's harshest cold snap in 30 years led to a sharp drop in new buyer enquiries.

The Royal Institution of Chartered Surveyors said its monthly house price balance — which represents the net percentage of surveyors who report higher rather than lower house prices — rose to +32 in January from +30 in December.

That was well above the consensus forecast of +28 and not far from November's three-year high of +35.

There were marked regional variations, with prices rising strongly in London and southeast England but falling in Wales, Yorkshire and Humberside and parts of northern England.

A combination of record low interest rates and tight supply has helped UK house prices recover almost half of their August 2007-April 2009 decline, according to mortgage lender Halifax which reported prices rose in January for a seventh consecutive month.

The Bank of England paused its pro-growth quantitative easing programme last week, but economists do not expect interest rates to rise until the second half of the year at the earliest.