Woman with shopping bagsRetail sales dropped last month, according to a major trade association, as consumers reined in spending and decided to pay off debt and save instead.

Retail sales values were down 0.3% on a like-for-like basis in January, the British Retail Consortium (BRC) said, the second worst January since the survey started 17 years ago. The figure compared to last January when sales had risen 2.3%.

The BRC, which represents 60% of retailers, said the decline was driven by a sharp slowdown in food sales, following the Christmas boost in December, but non-food sales were weak as well.

Stephen Robertson, BRC director general, said: "Customers parked their worries in December and spent, encouraged by discounts.

"Now, in the new year, reality has bitten again as concerns about jobs, wages and household costs reassert themselves.

"Despite consumer confidence improving in January, actual spending shows households concentrating on paying off debt, saving and battening down for another tough year."

Internet, mail-order and phone sales growth slowed in January after picking up sharply in December. Sales were 11.3% up on a year ago, less than December's 18.5% gain but similar to the 12.3% in January last year.

Clothing sales slowed sharply to near zero growth after a good December, the BRC said, with womenswear suffering most, while men's and children's clothing continued to show year-on-year gains, albeit much smaller than in December.

The association added that any sales were largely discount-driven with a consequent hit on margins as people had waited for clearance sales, especially when buying big-ticket items such as coats and dresses.

The survey echoes that of the CBI's, which showed retail sales volumes fell in January, after modest growth in December, with a balance of 22% of traders reporting a decrease on a year ago, the lowest level since March 2009.