Like-for-like retail sales in central London dropped 1.8% in October, the biggest fall in three years, according to the London Retail Consortium.
However, the 1.8% London sales drop was less than the 2.2% decline across the UK as whole.
Footfall in London in October was weaker than in the past few months, but still a little higher than a year ago, in contrast to the year-on-year decline in the UK as a whole.
Stephen Robertson, director general of the British Retail Consortium, said: "London's long-standing sales superiority over the rest of the UK is being rapidly swept away. The financial crisis has now rocked consumer confidence in parts of the workforce that it had previously not reached. Even London's high earners are worried about job security and the ailing housing market, so are reining in their spending."
Robertson added: "Hard-pressed households and retailers in London will hope the Bank of England's recent bold rate cuts will boost confidence in the run-up to Christmas."