Retail sales increased by 0.9% in March - less than expected - according to figures released by the Office for National Statistics.

Sales volumes increased by just 0.4% in March, less than half the figure that City analysts had predicted. This has been blamed on faltering consumer confidence as the UK struggles to emerge from the economic downturn.

Annual growth in retail sales has now risen 2.2% compared to last year.

"March's disappointing growth in retail sales fuels our suspicion that the upside for consumer spending - and hence overall economic growth - will be limited in 2010 as households still face very challenging conditions," said Dr Howard Archer of IHS Global Insight.