By Daniel Hunter

Official retail figures reported today (Friday) by the Office for National Statistics (ONS) confirm it's retail discounting which is driving sales with consumers reluctant to spend and retailers facing another difficult year.

They show the total value of retail sales up 3.5 per cent in January compared with the same month last year. That almost exactly equals January's inflation figure, showing any growth in volumes is down to retailers cutting prices.

The ONS statistics paint a slightly more positive picture than the British Retail Consortium's own Retail Sales Monitor, which showed total sales up 2.1 per cent compared with January 2011 but the official figures confirm non-food retailing is having a tougher time than food retailing.

The BRC has published new evidence today (Friday) as part of its pre-Budget submission, showing economic uncertainty is resulting in retailers increasing cash reserves rather than feeling they can invest in UK expansion and job creation.

"These numbers are slightly better than we would have expected but make it clear that price-cutting by retailers is what's driving any growth in business. Discounting is biting into retailers' margins with non-food businesses facing particularly tough times," British Retail Consortium Director General, Stephen Robertson, said.

"We are looking to the Government for steps to inspire confidence in business. Our pre-Budget research shows economic uncertainty is putting retailers off expanding their operations.

"In his Budget next month the Chancellor must take steps to make it more attractive for retailers to invest and create jobs, and to improve UK competitiveness so they do that here. It's a mistake to see retail as a sitting duck. Retail investment is globally mobile and the UK has to fight for it.

"Reforming the flawed system for setting business rates, which this year threatens an unaffordable increase of 5.6 per cent, is key but so is work to simplify planning, expand online opportunities overseas and incentivising investment in new equipment and technology."

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