The survey casts doubt on forecasts of a sharp rebound in retail sales after December's unexpected fall.
Retailers report the smallest annual growth rate in sales for a year in January, with trade below average for the time of year in most sectors. Retail sales are unlikely to have risen by as much last month as the 0.75 per cent expected in the City if the past relationship between the CBI survey and the official figures has held true.
The survey follows the publication yesterday of unexpectedly subdued factory gate inflation figures by the Central Statistical Office. The combination of good news on factory gate inflation and evidence that looming tax increases are convincing consumers to tighten their belts may lead the markets to reconsider the frosty reception they gave to last week's interest rate cut.
Manufacturers raised their prices 0.3 per cent between December and January. The annual rate of increase fell as a result to 3.7 per cent in the year to January from 4 per cent the previous month. Excluding food, drink, tobacco and petrol prices - all of which are affected by Budget excise duty increases - prices were raised 0.5 per cent. But they were flat after adjusting for the increase normal for the time of year.
The factory gate inflation figure on this definition fell from 2.9 per cent in December to 2.6 per cent in January, the lowest since July.
Changes in factory gate inflation tend to be reflected in high street prices within three to six months, which suggests that the figures are a good omen for headline inflation.
'As the boost to inflation from rising import prices fades, the weakness of domestic costs should bring core retail price inflation slightly lower this year', said Michael Saunders, of Salomon Brothers.
Industry's fuel and raw material costs are also exerting little pressure on inflation.
They dropped by a seasonally adjusted 0.2 per cent between December and January, the seventh successive month of flat or falling input prices.
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