British High Street 'still expecting Christmas boost'

British High Street 'still expecting Christmas boost'

High street retailers in the UK are still expecting a pre-Christmas boost despite a slowdown in sales growth this month, according to a survey today.

The CBI's distributive trades survey showed a balance of 36% of retailers reported a rise in sales in October against a year earlier.

This was down on the six-year high of 49% in September and lower than retailers had expected.

However a balance of 20% said sales were above average for the time of year - the best reading since May 2007 - while they are also expecting a surge next month as shoppers look to beat January's VAT rise to 20%.

The report showed a balance of 43% believe sales will be up year-on-year in November.

CBI head of economic analysis Lai Wah Co said it appeared the sector was hopeful of a strong run-up to the festive season.

"But looking beyond that, broader consumer caution may temper growth in spending into 2011," she said.

Economists were wary of today's CBI figures, which are at odds with far more pessimistic sales reports - both official and within the industry.

While the CBI reported the best sales growth for six years in September, figures from the Office for National Statistics showed a 0.2% drop and the British Retail Consortium also gave a far gloomier picture.

Samuel Tombs at Capital Economics said the CBI data remained "misleadingly upbeat", although he said the VAT effect was providing a likely fillip to sentiment.

Howard Archer, chief economist at IHS Global Insight, added: "On the face of it, the CBI distributive trades survey suggests that retail sales growth is decent at the start of the fourth quarter, which would be good news for hopes that economic activity can continue to hold up pretty well."

However, he said "the concern remains that consumers will rein in their spending in the face of serious headwinds" over the next year.

The CBI survey, which polled 66 retailers between September 28 and October 13, showed ongoing strength across the clothing and footwear sectors, although household goods slowed in line with a stalling housing market.

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