Retail sales fell at the fastest rate in 18 months in January, partly because heavy snow and ice kept shoppers away. They cut back on most things from food to furniture.

Sales volumes dropped by 1.8% between December and January, the sharpest fall since June 2008. The Office for National Statistics said the Big Freeze hit sales of household goods and petrol in particular. The fall was much worse than the City had pencilled in.

The figures end a week of bad economic news when inflation surged, unemployment rose and the public deficit hit a fresh record. The sharp drop in highstreet spending raises fresh doubts about the economy's recovery from recession.

For the first time petrol was included in the official retail sales data. Excluding petrol, sales were down 1.2% in January. Petrol sales slumped 11% from December, the biggest drop since July 2008 as people drove less in heavy snow. The reversal of last year's emergency VAT cut made matters worse for retailers and there is growing speculation that VAT could go up further to 20% after the election.

"While we have been warning for some time of a tough spring for retailers, the scale of today's slump is shocking. The effect of the VAT hike has triggered significant belt tightening among consumers, while freezing weather conditions stopped the remaining few who were still in shopping mood," said Jorg Radeke of the Centre for Economics and Business Research.

Clothing and shoe shops, however, benefited from the wintry weather, recording a 4.7% rise in sales, while household goods plummeted by 13.4%, the steepest fall in 12 years. It was driven by poor sales of electrical goods, furniture and do-it-yourself items. Supermarkets and other food stores also had a bad month with sales sliding 2.4%. The data suggest even online shops could not escape the Christmas hangover.

Daiwa economist Colin Ellis said: "With the labour market still very weak and private sector earnings growth almost non-existent - and tax rises and public spending cuts looming on the horizon - there is little reason to expect a strong bounceback in household spending this year. The Bank of England's optimistic growth forecast has just taken another knock."

The figures highlight the fragility of the economy, with fears that it could slide back into recession, and reinforce expectations that interest rates will stay on hold for most of this year.