Non-food retailers have experienced their worst month since July 1992, after sales fell by three per cent on 2008.
Official figures released by the Office of National Statistics show that overall retail sales fell by 1.6 per cent compared to the previous year.
The Centre for Economics and Business Research said the figures show the UK's economy has now entered the final phase of the downturn with consumer spend in slowdown.
According to the think tank, the first and second phases have now passed, namely the collapse in demand for financial and construction services followed by declines in global trade volume and inventories.
Senior economist at CEBR, Richard Snook said that the VAT cut had been successful, if only in delaying the inevitable slowdown in consumer spending.
"The main reasons we expect consumers' spending to be weak is the need to increase savings at a time of high unemployment, the squeeze on disposable income from low wage growth and certainty of tax increases and sharp public spending cuts in the near future," he said.
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