Falling retail prices helped high street sales pick up more than expected in January, according to figures released by the Office for National Statistics.

The data revealed that sales grew by 0.8% in January after falling by 0.2% in December as the impact of the credit crunch took hold.

The Bank of England has reduced interest rates twice in three months but concerns over rising inflation and news that consumer spending remains steady make future rate cuts less likely.

But while the positive growth figures are to be welcomed, the three-month total for November to January stands at 0.6%, compared to 1.4% for the quarter to September 2007.