ZURICH, March 18 (Reuters) - Swiss retail sales rose in January as consumers splashed out on food and drinks, but they are becoming more cautious on discretionary spending as the worst recession in decades takes its toll.
Retail sales rose 1.2 percent from a year-ago when adjusted for price swings after a 3.6 percent increase in December, the Federal Statistics Office said on Wednesday.
Consumers spent 4.5 percent more on food, beverages and tobacco, but cut spending on clothes and shoes by 3.4 percent. Purchases of office and consumer electronics were up nearly 10 percent in real terms as retailers slashed prices.
Spending on culture was down some 8 percent, sales of personal accessories dropped 12 percent, and the purchase of furniture declined by 0.4 percent.
"Compared to other countries, Swiss consumers are still relatively resilient," said UBS analyst Reto Huenerwadel.
But with unemployment rising, consumers were set to rein in spending. "People shy away from larger purchases," Huenerwadel said, pointing to the drop in new car registrations, which were nearly 19 percent lower in February than a year ago.
The Swiss economy slid into recession in the middle of last year as exports collapsed due to the slump in Switzerland's main trading partners. But the country is still holding up better than many neighbours as consumers have kept spending up.
Swiss consumer morale even improved slightly in January as lower inflation boosted spending power.[ID:nLC801709]
But the Swiss National Bank warned last Thursday, when it announced sweeping measures to boost the economy and fight deflation, that rising job worries would weigh on consumers' mood and hit consumption. [ID:nLB459488]
The central bank sees the economy shrinking 2.5 to 3.0 percent this year, which would be the steepest decline since 1975.
Switzerland's government is forecasting a surge in unemployment from 3.4 percent now to an average rate of 5.2 percent by 2010, the highest in over 10 years. (Reporting by Sven Egenter; editing by David Stamp)