Gloomy New Year as shops predict slump

Tim Wallace
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RETAIL sales are higher now than the run-up to Christmas a year ago, the Confederation of British Industry’s (CBI) distributive trades survey showed yesterday – the first year-on-year rise since May.

But the expansion is not expected to last, with sales set to fall again next month and consumer confidence dropping again, claims researcher GfK.

Forty-one per cent of firms told the CBI that sales in the first two weeks of December were up compared with the same period last year, while 32 per cent reported a fall – a net balance of nine per cent experiencing growth.

Yet sales volumes were deemed poor for the time of year by a net balance of 16 per cent of firms, and a balance of seven per cent expect January’s sales to fall on those 12 months earlier.

Sellers of durable goods like fridges were worst hit, with every single respondent seeing a fall on last December.

“This survey offers limited seasonal cheer for retailers,” said Howard Archer of IHS Global Insight.

“While much better than feared, it is evident that sales have been lifted by heightened discounting and promotions, which will have eaten significantly into many retailers’ margins.”

Meanwhile the GfK consumer confidence index fell two points to minus 33 – its lowest in almost three years.

“In the 37 years the index has been running it has only been lower on two occasions – a single month in 1990, and eight months during the 2008-2009 recession,” said GfK’s Nick Moon.