Surprise drop in growth of UK retail sales
HIGH street sales suffered a shock decline this month, but it is unlikely to dampen projections for strong spending this year.
Sales volumes were reported to have increased on the year by 30 per cent of firms, according to figures released yesterday by the Confederation of British Industry (CBI). It compares to the 29 per cent of firms who said sales volumes had declined. The overall balance was therefore one per cent, far below expectations of 42 per cent.
“We doubt that this heralds the beginning of a slowdown in consumer spending,” said economist Paul Hollingsworth from Capital Economics. “With earnings growth picking up and lower energy prices providing a substantial windfall, the recovery in spending should be back on track soon.” He also notes that the CBI survey can be quite volatile on a month to month basis.
His reassurances were echoed by CBI economist Rain Newton-Smith.
“The outlook for the retail sector is fairly positive, with the boost to household incomes from falling inflation likely to support spending. Indeed, firms remain upbeat about the businesses situation over the coming quarter,” she said.