Shops 'may have weak Christmas'

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UK retailers could be set to experience a very limited rise in Christmas sales compared with last year, the British Retail Consortium has warned.

The trade body estimates that like-for-like sales, which exclude new store openings, could increase less than 3% this festive season from 2006.

Its warning came after it said the sector had experienced a tough 2007.

A separate Lloyds TSB study said consumer confidence had been hit by higher prices and mortgage payments.

Its survey of 2,000 people showed that four out of five expect food and petrol prices to rise further over the next 12 months.

'Slump in spending'

The British Retail Consortium (BRC) said it expected overall High Street sales to expand 5% this Christmas to almost £12bn.

BRC director general Kevin Hawkins said that even if retailers do enjoy a Christmas boom, "it will be followed by a slump in spending, as consumers really start to feel the pinch and tighten their belts".

UK petrol prices have risen sharply over the past year, with one litre of unleaded breaking through the £1 mark earlier this month.

This has come on the back of record global oil prices, which have increased as a result of supply concerns and the weak dollar.

At the same time, many households have seen higher mortgage payments, as interest rates were increased five times in 12 months to 5.75% in July, where have they remained since then.

Many economists now expect UK rates to fall slightly in early 2008 to make it easier for homeowners, but others maintain that the Bank remains determined to guard against the inflationary pressures caused by the higher oil and petrol prices.