High street sales growth ends

Hopes of stronger high street sales failed to materialise in February and instead sales growth came to a halt, while the prices of goods rose strongly, the CBI said this week. A third (34%) of respondents to the latest Distributive Trades Survey said year-on-year sales volumes rose in the first.” half of February, while 36% said they were down. The resulting rounded balance of -3% was the first negative result since November 2006 (-9%) and disappointed retailer expectations (+10%). Although sales volumes growth lay below the long-term trend of +18%, the gradual slowing that started last May is not expected to worsen next month, when retailers expect continued flat sales.

Sales for the time of year were considered slightly below average, while the three-month moving average balance, which smoothes out monthly blips, fell to +3%, which was the lowest since late 2006.

Orders placed with suppliers fell marginally, while stock levels edged up relative to expected demand but remained below their long-run average.

However, despite belt-tightening among increasingly cautious consumers and flat retail sales, the prices of goods in the year to February increased at their fastest rate in over a decade, as many retailers felt the pressures of rising energy, food and raw material costs.

Fifty-five per cent of respondents said that average selling prices were up on a year ago, while 6% said they were down, giving a rounded balance of +50%. This was the strongest since August 1996 (+51%) and a similar rate of price increase is expected next month (a balance of +48%).

Ian McCafferty, CBI Chief Economic Adviser, said: “The high street has been slowing gradually since last April and sales earlier this month were very subdued, while prices have risen strongly