by business editor Trevor Sturgess

Hard-pressed shoppers are deserting malls and high street in droves as retail sales plummet to a 16-year low.

UK sales values fell 1.9 per cent in the year to March 2010, according to the British Retail Consortium-KPMG Retail Sales Monitor. Like-for-like sales plunged 3.5 per cent, against a 4.4 per cent increase in March 2010. It was the steepest decline since 1995.

Sales at out-of-town shopping malls like Bluewater are also down by an estimated 12 per cent as shoppers avoid the soaring cost of fuel.

Uncertainty over jobs and incomes has been blamed for the fall, as well as the later Easter holiday, traditionally a good pending period. Food sales fell, but big-ticket home and furniture purchases suffered most.

Online, mail order and telephone sales growth fell further in March. Although 7.5 per cent higher than a year ago, it was the smallest increase since records began in October 2008 and much weaker than the 10.4 per cent in February.

Stephen Robertson, director general of the British Retail Consortium, said:"This is the worst drop in total sales since we first collected these figures in 1995. Non-food retailers were particularly hard-hit. This is strong evidence of the pressure customers and traders are under. This year's later Easter is a factor but this fall goes way beyond anything that can be explained by that alone."

High inflation and low wages growth had produced the first year-on-year fall in disposable incomes for 30 years.

"Mounting fuel and utility costs, falling house prices, higher VAT and the prospect of more tax rises and job losses left people unwilling to spend unless they really had to. These pressures aren't going away and the arrival of higher National Insurance is likely to compound them in the immediate future."

The dismal retail figures may keep the lid on interest rates for a while, although rising inflation is stoking up demand for a rise in May. Mr Robertson said a rate rise would do more harm than good.