A barnstorming performance from clothing and footwear retailers helped the high street deliver its best sales for more than six years in September, with chains expecting the mini-boom to continue next month.
However, the strong sales, revealed by the CBI yesterday, raised eyebrows among economists who expect retail momentum to peter out as the Government's austerity measures kick. This view was shaped by a surprise fall in retail sales between July and August, according to the latest Office for National Statistics (ONS) data.
An impressive 60 per cent of retailers said that sales rose in September, while 11 per cent said they fell, according to the CBI's Distributive Trades Survey. The resulting balance of 49 per cent in positive territory was ahead of retailers' forecast of 39 per cent and is the highest figure since a net balance 51 per cent in May 2004.
Ian McCafferty, the CBI's chief economic adviser, said: "High street sales performed well again this month, with growth better than retailers predicted. The Bank Holiday weekend, combined with the tail-end of the summer sales have resulted in a bumper period for retailers. Clothing and footwear sales in particular look to have been boosted by the launch of new autumn ranges."
While many retailers have enjoyed a better year than expected, stalwarts including Next and Debenhams have warned of subdued trading on the high street. Already feeling the pinch from rises in petrol and food prices, as well as anaemic wage increases, consumers are braced for a wave of public sector job losses and tax rises over the coming year, notably a rise in VAT to 20 per cent on 4 January.
Despite the gathering clouds, the CBI said that clothing, and footwear and leather retailers enjoyed "particularly strong growth" in September, boosted by the arrival of new autumn ranges. The furniture and carpet retail sectors, which have enjoyed a difficult two years, also toasted "solid sales" over the period.
The CBI's survey was conducted between 26 August and 15 September. A balance of 14 per cent of retailers said that actual sales volumes were above average for this time of year for the first time since June 2007. Mr McCafferty said: "Retailers expect sales growth to continue next month and, as we get closer to January, sales will be helped by households seeking to beat the VAT rise. However, weak prospects for take-home pay mean that consumer spending is likely to be fairly restrained in 2011."
But for the time being, retailers remain upbeat and a net balance of 47 per cent expect higher sales volumes in the first half of October.
However, Capital Economics described the CBI's September data as "implausibly strong", partly because it was out of kilter with ONS data, which found that retail sales volumes fell by 0.5 per cent between July and August.
Vicky Redwood, the senior UK economist at Capital Economics, said: "Even if high spending is holding up as well as the CBI survey suggests, we very much doubt it will last."
Yesterday, the National Accounts showed a sharp fall in the savings ratio in the second quarter, showing that consumers are financing their spending by dipping into their savings, a trend which Ms Redwood expects to continue.
On Monday, Charles Bean, the Deputy Governor of the Bank of England, told savers to stop complaining about low interest rates and start spending to boost the economy.
On the CBI data, Howard Archer, the chief European economist at IHS Global Insight, said: "The suspicion remains that further out consumers are likely to find life hard and will be constrained in their spending."Reuse content