High street surge to continue as Britain goes on shopping spree

The nation went on a shopping spree last month, pointing to a continuing surge in high street spending, according to the Confederation of British Industry. Its July distributive trades survey published today recorded the second-biggest increase in sales since the start of 1990, beaten only by June's increase.

The underlying rate of growth in sales volumes rose slightly between June and July. Retailers expect next month's increase to be the strongest since December 1988.

Alistair Eperon, chairman of the CBI's distributive trades survey panel, said: "As firms' expectations have been met over the past two months, their stronger expectations for August are even more encouraging."

The results, ahead of official figures for retail sales, add to the weight of evidence pointing to a significant upturn in consumer spending.

The Bank of England this week cited buoyant business surveys as one of the reasons it thought interest rates would have to rise at some point, and preferably sooner rather than later. Four recent surveys of manufacturing have signalled that a recovery is also under way in industry.

The balance of retailers reporting higher rather than lower sales was 43 per cent in July compared with 45 per cent in June and well up from the average of 30 per cent in the preceding three months. The expected balance for August climbed to 50 per cent.

A balance of 38 per cent said the volume of orders they placed with suppliers increased last month - well ahead of their earlier expectations. The 33 per cent expecting an increase in orders this month is the highest recorded for nearly eight years.

The only sectors not to report a July pick-up in sales compared with a year earlier were newsagents and off-licences. Grocers, clothes and shoe shops said they enjoyed a second successive month of strong growth.

The sectors linked to the housing market - furniture and carpets, DIY, china and household goods - said good sales growth continued, though at a substantially lower level for furniture and carpet retailers.

The survey also reported the second successive month of stronger-than- expected sales by motor traders. Orders placed with suppliers rose sharply in July and are expected to climb further in August. Wholesalers' volumes picked up after a slow-down in June.

The pound rose by more than a pfennig to DM2.3005 yesterday.