LONDON (Reuters) - British retail sales volumes unexpectedly fell at their sharpest annual pace in five months in January as freezing weather and the reversal of the VAT cut depressed demand, a survey showed on yesterday.

The Confederation of British Industry's monthly distributive trades survey reported sales balance fell to -8 in January from +13 in December, confounding forecasts for a reading of +8 and below retailers' own expectations for a balance of -2.

"The big freeze kept many shoppers away from the January sales and the VAT hike has hit bigger purchases like furniture and electricals," said Andy Clarke, chief operating officer of Asda.