New figures fail to lift gloom for retailers

Figures showing slightly better-than-expected sales in the run-up to Easter failed to lift the gloom for downbeat retailers today.

The latest survey by business body the CBI showed a balance of 21% of retailers reported that sales volumes increased in the year to April, up from 15% in the previous month, and more than the 18% who had expected a rise.

The survey, which covered the first two weeks of the month, suggests that retailers continued to enjoy a moderate pick-up in trade after official data showed a surprise boost for sales the previous month. But, worryingly for the economy, they feel the growth may be short-lived.

Retailers predicted that sales growth would decline marginally in May and remain worse than normal for the time of year.

CBI chief economic adviser Ian McCafferty said: "Despite slightly better year-on-year sales growth in April, this survey shows things are far from rosy on the high street.

"For the third month in a row, retailers considered sales to be unseasonably poor, stocks are running quite high and orders with suppliers are expected to fall.

"With few signs of demand picking up rapidly in the coming months, conditions on the high street look like remaining tough for retailers."

Average sales growth for the quarter, which the CBI said indicated the underlying trend, hit its lowest level since July.

Howard Archer, chief economist at IHS Global Insight, said: "The CBI survey overall does little to dilute the underlying impression that consumers are becoming less willing and able to spend in the face of serious headwinds.

"Given that consumer spending accounts for some 65% of GDP, this is worrying for growth prospects.

"Consumers' purchasing power is currently being squeezed hard by high inflation in tandem with ongoing muted wage growth."

He added that retailers may have received a boost from Easter, which was later than the previous year, the sunny weather and the royal wedding, which may have lifted demand for souvenir products, and food and drink for street parties.