Retail sales fell by just 0.1 per cent in October, much less than the forecast 0.9 per cent decline, official figures revealed today.

The statistics from the Office for National Statistics (ONS) fly in the face of recent grim data on British retail revenues as well as frantic efforts by the likes of Marks & Spencer (M&S) to capture cash-strapped shoppers with today’s "20 per cent off" sale.

Earlier this week, the British Retail Consortium (BRC) said that the total value of retail sales in the UK fell for the first time in three years.

The BRC sales monitor for October showed that like-for-like sales were down 2.2 per cent and total sales fell 0.1 per cent, marking the first annual drop since April 2005.

However, the ONS said today annual sales rose 1.9 per cent compared with October last year, after a 1.7 per cent annual rise in September.

Better-than-expected mortgage lending figures also emerged today. The Council of Mortgage Lenders (CML) said that gross lending rose nearly 7 per cent to £18.7 billion in October compared with the previous month.

However, the CML said September was "admittedly weak" and gave warning of an outlook of "continuing weakness" in the market.

Shoppers appear to be reining in their spending on non-essential items. According to the ONS, non-food sales dropped by 1.1 per cent, with clothes trade down 1.5 per cent.

However, household goods, especially electricals, took the biggest hit, dropping by 3.4 per cent. There was bad news for department stores too, with sales falling by 1 per cent. But spending on food was relatively robust as sales rose 1 per cent in October.

The ONS conceded today that monthly figures are volatile and said the three monthly figures, which show no change in the three months to October compared with the previous three months, are a more accurate reflection of retail trends.

The ONS has previously come under fire for its retail statistics after they showed a record rise in sales in May and a record 4.3 per cent fall in June.

Alan Clarke, UK economist at BNP Paribas, said the ONS was “living up to its reputation as being a random number generator”.

He said: “Surveys are weak, consumer confidence is at rock bottom, unemployment is shooting up and yet retail sales manages to post a contraction of 0.1per cent, much higher than the near 1 per cent contraction expected."

The ONS data was published as some of Britain’s biggest retailers embarked on a brutal pre-Christmas price war today.

As well as M&S, Sir Philip Green’s Arcadia Group is also holding a 20 per cent-off campaign and Debenhams will go on the offensive with a three-day “spectacular” sell-off.

Analysts said that the price cuts could lead to a vicious circle of margins eroding and sales declining as shoppers delay their Christmas purchases in the hope of last-minute discounts.

Arcadia announced sales at its Dorothy Perkins, Wallis, Evans and Burtons chains yesterday.

On Monday, Wm Morrison introduced aggressive promotions on foods, including buy-one-get-two-free offers. J Sainsbury and Tesco are cutting prices of Christmas gifts and clothes

More than a third of consumers have cut their monthly spending by an average of £160, totalling £2.7 billion a month, according to a survey by the Post Office.

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