The latest distributive trades survey suggests that consumers may be tightening their belts ahead of next month's tax increases. A net balance of 10 per cent of retailers reported sales up on the same month last year, the lowest balance since January 1993. For the seventh successive month trade was more depressed than retailers had forecast a month earlier.
City analysts had been expecting a small rise in retail sales volume in February, but the survey suggested that this might be over-optimistic. Don Smith of Midland Global Markets said the survey was consistent with a 0.5 per cent fall on the month. Simon Briscoe of Warburg Securities predicted 'a small fall'.
The survey rallied hopes of another interest rate cut by suggesting that economic growth might be slowing while inflationary pressures remain subdued. The number of retailers reporting that they had raised their prices in the last year was little changed from November.
The stock market reflected the hopes of lower base rates, with the FT-SE index of 100 leading London shares rising by 34 points to 3,267.4 in modest trading. The June short sterling future rose by six basis points to 94.9, not quite fully pricing in a quarter-point cut in base rates to 5 per cent.
Nigel Whittaker, chairman of the CBI's distributive trades panel, said that large retailers were still outperforming small ones, with single-outlet shops reporting lower sales volume than a year ago. Supermarkets and chain stores were better placed to cut prices because their size gave them greater financial muscle.
The survey showed that retailers had hardly changed staffing levels in the past year. But this masks a long-term trend away from full-time employment towards part-time working, which allows retailers to tailor their staffing to peak periods.