Retail sales are rising at their fastest pace in more than eight years as shoppers bring forward purchases before January's increase in sales tax, a survey by the Confederation of British Industry showed.
The CBI distributive trades survey's December sales balance rose to +56 from +43 in November, the highest index level since April 2002. Analysts had forecast a fall to +35.
The orders balance was the highest since December 1983, rising to +52 from +33, but the expected sales balance for January pointed to a decline in the headline index to +35, the lowest expected reading since July.
"December's strong survey balance is likely to capture spending being brought forward ahead of the January increase in value-added tax," said CBI chief economic advisor Ian McCafferty.
"Indeed retailers expect sales growth to lose some momentum in the New Year. We remain cautious about prospects for the retail sector further ahead, given ongoing uncertainty over the resilience of consumer spending," McCafferty said.
The survey showed strong growth in sales from clothing and non-specialised stores, as well as the fastest sales growth for hardware and DIY stories since the survey started in 1983.
City A.M. Reporter