Demand for luxury goods remains strong despite the post 11 September downturn, a new report has said.

Research by Mintel found that low interest rates, reduced levels of savings and a more affluent society have helped maintain demand for luxury items.

Spending on items like jewellery, perfume and designer clothing rose overall for 2001, although sales did falter in the months following September's terror attacks.

"Despite the economic downturn, consumers are more willing to spend money on themselves," said Mintel analyst Bryan Roberts.

Although sales fell during the last few months of 2001, profits at companies like Armani and Louis Vuitton Moet Hennessy (LVMH) rose for the year as a whole Mintel said.

Despite Mintel's findings there have been signs of trouble in the sector. Last month LVMH issued another profit warning, after having already reduced its profit forecast four times last year.