Retail sales in London fell 0.04% on a like-for-like basis in September - the worst performance since summer 2005, but still stronger than the 1.5% decline in sales across the UK.
Like-for-like retail sales for central London over the three month period between July and September were ahead 4.4% against a 1.1% fall across the UK as a whole.
According to the British Retail Consortium, footfall in London was weaker than in the past few months but still remained above its year earlier level. SPSL data showed that footfall was up 3.8% against September 2007.
The BRC added that clothing and footwear sales in London were difficult during September despite further heavy discounting.
BRC director general Stephen Robertson said: "This is the first negative sales figure for London retail sales since October 2005 when the effects of that year's terrorist attacks were still being felt."
"Customers in London were more resilient than elsewhere in the UK but turmoil in the City and the fastest rising unemployment in the UK have shaken confidence more than elsewhere."
Robertson added: "London retailers are still outperforming the rest of the UK but with the fall out from a troubled financial sector far from over there may be worse to come."