An apparent double-digit plunge in January retail sales figures was distorted because the Lunar New Year holiday fell in that month last year. Data released yesterday showed retail sales value plummeted a year-on-year 11.7 per cent in January to HK$15.9 billion. Retail sales volume fell 10.3 per cent after price changes over the period were discounted. But the Government said festive buying in January last year meant the figures suffered because of a high base of comparison. The Lunar New Year was in February this year. On a seasonally adjusted basis - comparing a three-month period with the preceding three months - sales volume slid just 0.3 per cent. Retail sales have now declined year-on-year for the fifth consecutive month. Sales volume of footwear, clothing and other associated products was down 18.3 per cent by volume on last January, while furniture and fixture sales rose 4.4 per cent by volume. By value, sales of food excluding supermarkets fell 16.4 per cent. Economists blamed weakening consumer demand amid rising unemployment. 'The sharp recovery in inbound tourism, especially that from China, failed to lend much support,' Morgan Stanley economist Denise Yam Wing-yam said. Macquarie regional economist Li Lian Ong said the figures confirmed private consumption had yet to turn around in Hong Kong. However, Ms Ong said the Government's Budget prediction that there would be a 2.8 per cent price fall this year, compared with deflation of 1.6 per cent last year, was 'quite pessimistic'. National Australia Bank economist Kevin Lai said paying more attention to the seasonally adjusted figure of a 0.3 per cent fall in retail sales volume 'makes better sense, if not perfect sense' than the year-on-year figures, in order to iron out the distortion of the Lunar New Year. 'But it's still negative, it doesn't really suggest retail sales have been bottoming out, the only positive thing to say is that the decline is narrowing,' Mr Lai said. On a seasonally adjusted basis, there has been a gradual improvement from the minus 5.1 per cent recorded in the three months to September compared with the previous three months. Nomura International senior economist Pu Yonghao said: 'Basically you are squeezed on both sides from weakening demand and a high base of comparison.' Retail sales volume increased 4.1 per cent in January last year. 'I don't expect the same sort of drop in the coming months because of the high base effect, but sales will remain subdued because of the poor job prospects,' Mr Pu said, adding unemployment would soon top 7 per cent. 'The first quarter is going to remain very weak . . . there will be a three- to six-month lag period before Hong Kong benefits from United States recovery.' Ms Ong said the Government's 1 per cent gross domestic product growth estimate for this year was 'quite conservative and so they're not expecting things to turn around anytime soon. As a result it was quite a cautious Budget'. She would have liked to have seen more concrete long-term plans spelt out in the Budget speech about how to close the deficit. The market had been expecting such a plan. 'Ratings agencies look at things like the future of your revenue stream, whether it is consistent or volatile, and Hong Kong's Budget deficit has been a talking point with investors for a while now,' Ms Ong said.