High street spending still strong, CBI survey shows

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Consumer spending on the high street is still "fairly robust", the Confederation of British Industry said yesterday. Growth in sales volumes picked up in September, although by less than retailers had expected.

Alastair Eperon, chairman of the CBI's Distributive Trades Survey, said: "Growth remains quite strong and expectations for October indicate a quickening in the pace of expansion."

The survey divided City opinion about whether windfalls of free building society shares were still helping boost consumer spending. Some pundits focused on the fact that underlying sales volumes for the past three months have slowed somewhat, while others explained that the impact of the funeral of the Princess of Wales had been expected to leave the figures far weaker.

Michael Saunders of Salomon Brothers was in the first category. "The windfall boost is beginning to fade," he said, pointing to the fact that the underlying trend shown was the weakest since the start of 1996.

But John O'Sullivan at NatWest Markets said he had expected a very weak result from the survey. "Continued strength in the demand for durables suggests the windfall effect is not diminishing yet," he said. The fact that sales had been lower than retailers were expecting could be explained by the shutdown on the first Saturday of the month.

The balance of retailers reporting higher rather than lower sales volumes edged up to 26 per cent last month from 22 per cent in August. The increase was due mainly to a surge in purchases of big ticket items such as washing machines and televisions, where the balance climbed from 5 per cent to 80 per cent. In some other areas sales volumes slowed down, especially housing-related goods such as furniture and DIY.

Economists cautioned that in recent months the CBI survey had proved an unreliable guide to the official figures. If the latest survey did turn out to be more closely linked, the official statistics would show higher annual growth in sales volumes because of a weak September performance last year, but a small decline compared with August.