Retail sales growth in London hit a five-year low in January, hampered by the bad weather and less discounting than the same time last year.

Retail sales in central London rose 3.5% in January, against a 6.5% increase in the same month last year, according to the British Retail Consortium London Retail Sales Monitor. This marks the worst January sales growth since 2005.

The report said snowy weather and less discounting than a year ago meant that people made fewer shopping trips but it seems those that did get out spent more.

The strengthening of the pound in January, especially against the euro, lessened London’s price advantage for visitors from Western Europe. The Chinese New Year falling in February this year but in January last year may have also delayed sales for some retailers.

Beauty products held up, with gift sets popular in the clearance Sales. Food sales benefited from the snow, as shoppers stocked up on basic essentials. Non-essentials and discretionary homewares struggled, though showed gains for some in clearance Sales. Clothing, footwear and warm accessories were also driven by the weather.

BRC director general Stephen Robertson said: “Customers are becoming cautious again about spending when they don’t have to, but London retail sales are still showing real terms growth and significantly outperforming the rest of the UK. The capital’s retailers will be hoping these results are mainly due to bad weather, rather than any long-term return to concerns about personal finances, keeping consumers away from shops.”

Consumer confidence improved in January 2010 and was much better than year ago, according to the Gfk NOP measure.

Head of retail at KPMG Helen Dickinson said that the results were flattered by the impact of higher shop prices, given the higher VAT rate in January 2010 compared to January 2009. She added: “There is no doubt that the strong sales we saw in December 2009 are not indicative of the trend for the rest of the year. London is likely to continue to outperform the rest of the country.”