GROWTH in retail sales slowed sharply in January, to just five per cent year-on-year in volume terms. It is the first time the government figures have started to catch up with anecdotal evidence that Hongkong shoppers are reining in their spending. Both retailers and economists have been signalling the easing of growth since last October. The January figures round off a period of steady deceleration that started towards the end of last year. December year-on-year growth was 11 per cent, up from November's nine per cent, while the previous three months all saw double-digit growth. Because the Lunar New Year - a traditional spending festival - fell in January this year and early February last year, the slower growth is still more telling. Measured in value terms, January sales were up 11 per cent over the year to an estimated $15.8 billion, marginally more than the December total. According to the Government, the growth was fuelled by spending on clothing and footwear, with supermarket and department store sales recording the biggest jumps on the back of Lunar New Year buying. Year-on-year, clothing and footwear sales leapt 33 per cent in value and 23 per cent in volume. Sales in supermarkets also climbed sharply, by 28 per cent in value and 20 per cent in volume. In department stores, the picture was slightly less rosy, sales rising 16 per cent in value terms and eight per cent in volume. For the whole of last year, retail sales grew by 17.8 per cent in value and 12.1 per cent in volume, with booming sales of motor vehicles responsible for much of the rise. The gloss has begun to fade from the car market this year, with January sales registering what the Government called ''a considerable decrease'' of 16 per cent in value and 20 per cent in volume. Booming Mercedes sales were the basis of a 145 per cent increase in last year's profit for Jardine International Motor Holdings. The group sold 6,451 Mercedes vehicles last year but chairman Simon Keswick warned after the profit announcement that prevailing market conditions suggested the current year would not be as kind to the company. Analysts had been expecting weaker retail sales for January following the release of money supply figures indicating M1 money supply had risen by 14.8 per cent over the same month last year. February money supply figures released yesterday showed an even stronger unadjusted growth in the narrow M1 measure of 16.7 per cent year on year, although it fell by 7.8 per cent in February compared with January. The relatively subdued performance of the retail sector is in sharp contrast to the restaurant and bar sector, which lifted sales by 18 per cent to about $45 billion last year.