CBI warns consumer caution to continue
High street sales growth slowed in the first half of March amid |lingering caution among consumers, the CBI business group warned yesterday.
A 13% balance of retailers reported stronger sales than a year ago — lower than expected and well below February's 23%, according to the body's distributive trades survey.
Andy Clarke, chairman of the CBI's distributive trades panel, said a second month of growth in a row was “encouraging”. But he warned: “With a weak economy and pay freezes for many, consumers are likely to remain cautious for some time.”
While grocers and household goods firms saw a strong performance, sales in clothing stores, furniture and carpet retailers rose at a much slower rate than in February. Hardware and DIY stores continued to struggle, while sales for the time of year were judged poor by a net 6% of retailers.
Although a 14% balance of firms expect a stronger April than a year ago, retailers face a hard slog over the year ahead. Mr Clarke said: “Conditions will stay tough on the high street for some time and shoppers will be holding their breath for the Budget.”
The CBI's survey covers 138 firms and 20,000 outlets, accounting for around 40% of jobs in the retail sector. Howard Archer, economist at IHS Global Insight, said the survey was “modestly softer” than hoped for and said shoppers were cautious ahead of likely tax hikes to tackle the UK's dire public finances.
He said: “Still serious concerns about the economic outlook and jobs are likely to maintain consumers' desire to improve their personal finances.
“Consumers will also be wary that further out they are very likely to face higher taxes as part of the major corrective action that will be needed to rein in the Government finances.”