CBI survey signals subdued spending in the high street: Results likely to ease fears of early rise in interest rates

HIGH STREET spending rose much less rapidly in July than retailers had expected in the previous month, a survey by the Confederation of British Industry shows today. But the trend remains firmly upward.

Forty per cent of retailers reported trade in July better than a year earlier, compared with 28 per cent who reported lower sales, according to the distributive trades survey. The 12 per cent balance reporting higher sales is down on last month's 27 per cent.

The survey is likely to ease fears of an early rise in interest rates, although the implications for Thursday's official retail sales data are unclear. Last month's CBI survey pointed to a big jump in high street spending which was not borne out by the official data. The survey may have been affected more by summer sales, which have started later this year than last.

'The slower growth in retail sales in July is not surprising when set against the strong annual volume increases reported this time last year,' said Sudhir Junankar, CBI economist. .

The survey also showed that retailers thought trade in July was around average for the time of year. Orders from suppliers did not rise for the first time in 18 months, as stocks of unsold goods remained high in relation to sales.

Slower sales growth may reflect the stalled recovery in the housing market, which has reduced demand for durable goods such as furniture.

The National Association of Estate Agents said yesterday that the housing market had picked up a little but the number of offers received in July fell by 2 per cent from the previous month. The Royal Institute of Chartered Surveyors' survey for the three months to July showed 82 per cent of estate agents reporting flat house prices, with 9 per cent each reporting that they were rising and falling.

The markets remained fixated on today's US Federal Open Markets Committee meeting, which is expected to agree the fifth rise in US interest rates since February.

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