UK consumer demand slows as household budgets feel the pinch
More evidence of the squeeze on household budgets has emerged after the owner of Primark revealed a slowdown in UK consumer demand.
Associated British Foods said the discount fashion chain's half-year sales rose 3% on a like-for-like basis - half the level achieved during its previous financial year.
AB Foods said that while Primark traded well ahead of Christmas despite the snow chaos, the mood has changed among UK shoppers in 2011.
Consumers are reining in their spending as they come under pressure from the VAT hike and soaring petrol prices.
John Bason, finance director at AB Foods, said it is a trend he expects to see mirrored among other retailers this year. He said: "Even for people who don't feel they will lose their jobs, they will feel they are being squeezed.
"It won't just be Primark, but we'll see it for a number of retailers."
Primark has been the group's star performer in recent years as it has ridden the boom in demand for budget clothing on the high street.