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January saw a record low in online retail growth, a new report has found.

Annual like-for-like figures showed only a 5% increase from 2009 to 2010 and monthly growth fell by 22% between December and January, the IMRG Capgemini e-Retail Sales Index found.

While high street stores have blamed the poor weather for low sales in January, the decline in online figures suggest the lingering hangover of the recession and the end of the VAT holiday are also hitting retailers hard.

“Less retailer discounting due to well planned stock levels and the increase in VAT equally appear to have had an impact on the online retail sector during January,” said Tina Spooner, director of information at IMRG.

In terms of individual markets, sales in certain sectors fell compared to last year, with less people buying electrical equipment and house and garden supplies online.

“With many still feeling the pinch from Christmas it’s not surprising that the index was down in January,” said Cameron McLean, general manager for UK merchant services at PayPal. “However, the like-for-like monthly index shows that sales of clothing, footwear and accessories and health and beauty products are up compared to January 2009.

“This mirrors the trend we’ve seen at PayPal... where Ugg boots and perfume were amongst the most frequently searched for items in January. We believe this month-for-month increase in sales of these ‘pick me up’ products is a sign that shoppers still want to treat themselves and are increasingly looking to discount and voucher sites to do so.”