High street sales get Christmas boost

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High street sales volumes were up compared to last year for the fifth consecutive month, according to the CBI’s latest quarterly Distributive Trades survey, spurred on by the pre-Christmas period.

However, the organisation has warned that sales growth may begin to falter again in the New Year as consumers hold back spending after the festive season.

The research revealed that 55 per cent of retailers saw the volume of sales rise in the two weeks to 10th November while 13 per cent said they fell. The resulting rounded balance of 43 per cent was in line with expectations and an improvement on October’s balance of 36 per cent.

However, a net six per cent of retailers said sales in November do far were below average for this time of year.

Sales grew most strongly in November for grocers and clothing retailers as shoppers begin to get geared up for Christmas.

The three-monthly moving average of sales volumes, which smoothes out monthly peaks and troughs, edged higher to a balance of 43 per cent.

Retailers expect the strong sales volume growth to continue during the pre-Christmas period reaching 45 per cent, and a net 11 per cent of retailer expect the overall business situation to improve over the next three months.

The survey found that retailers, for the second quarter running, are also planning to invest more over the next 12 months, compared to last year (28 per cent).

Ian McCafferty, CBI chief economic adviser, said: “High street sales growth held up well in November, and retailers are hopeful that the run-up to Christmas will be just as strong.

“However, looking into the New Year, retail sales growth may lose some of its sparkle, as consumers rein in spending after Christmas.

“Confidence remains fragile, VAT is rising in January, and a combination of weak wage growth and high inflation is eating into household incomes.”

The research found that price inflation remains high with 51 per cent of retailers saying average selling prices are higher than a year ago, and six per cent saying they fell. That gives a balance of 45 per cent, compared to 58 per cent in the August quarter.

Prices are expected to rise at a similar pace in December (42 per cent).

Looking at the wholesaling sector, sales volumes rose in November compared with a year ago, with sales of clothing, textiles and footwear, and industrial materials among the best performers.

Of those wholesalers responding, 41 per cent reported a rise in sales volumes, and 20 per cent a fall. That gives a rounded balance of 20 per cent, which was three per cent better than expected and an improvement on October’s performance of just three per cent.

Sales growth is expected to be flat in December. 

In the motor trades, sales volumes fell sharply in November, compared to a year ago at 48 per cent, which was worse than the expected +13 per cent, and the weakest balance since July 2009 (-76 per cent).

Sales volumes are expected to fall again next month by 37 per cent.

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