CBI reveals sales increase is in line with retailer expectations but that the pace of growth on the high street is slowing down.
The Confederation of British Industry's (CBI) Distributive Trades Survey found that 61% of retailers reported an increase in sales volumes in the two weeks from January 4. Compared with 24% of retailers who reported a fall in sales, the resulting balance of 37% is a drop from the balance of 56% noted in December, revealing a slowdown in the level of growth.

While sales were above seasonal norms in January, this was to a lesser extent than in December, with a balance of 8% reporting above average sales for the time of year, compared with 18% in December.

In February, retailers expect sales growth to ease further. A balance of 25% of retailers expect the volume of sales to increase on last year, with figures forecast to be in line with the average for the time of year.

According to the CBI's figures, grocers, footwear & leather and clothing retailers reported the strongest sales growth last month, while sales of durable household goods fell particularly sharply.

CBI chief economic adviser Ian McCafferty said: "This survey captures an interesting period for retailers, spanning the introduction f the VAT rise and price reductions during the post-Christmas sales. The lure of seasonal sales and price discounting may have helped mitigate some of the impact of the VAT increase on volumes. However, retailers expect the pace of sales growth to slow further next month, and orders placed with suppliers have flattened out."

He concluded: "Consumer demand is expected to be weak in the coming months, as the spending power of households is hit by a combination of sharply rising prices and weak wage growth. Retailers can expect a challenging period ahead."