And consumer confidence has plummeted to a 12 month low, separate data from researchers GfK NOP revealed today.
The positive balance of retailers reporting a year-on-year increase in sales dropped from 56 per cent in December to 37 per cent this month, the CBI reported.
And retailers anticipate a further slowdown in growth for next month, the CBI said. A balance of 25 per cent expect February’s sales to be greater than those in February 2010.
Some analysts even doubted the growth in sales shown in the CBI’s distributive trades survey.
“The survey’s balance continues to be well above the long-run average and to report optimism which has not materialised in the official data,” said Simon Hayes of Barclays Capital.
“The results have been out of kilter with the far weaker official and British Retail Consortium measures for a few months now,” added Vicky Redwood of Capital Economics.
The total volume of sales in December increased by just 2.6 per cent on the previous year – below the rate of inflation – the government’s Office for National Statistics revealed last week.
Meanwhile the GfK NOP consumer confidence index dropped eight points this month to -29.
“January’s eight point drop represents an astonishing collapse in consumer confidence,” said Nick Moon of GfK NOP social research. “In the 35 years since the index began, confidence has only slumped this much on six occasions,” he said.
The government’s second VAT rise in 12 months, combined with rising inflation approaching four per cent, are likely squeezing household finances, analysts said.