Retail sales show sluggish growth

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Retailers delivered sales ahead of expectations in the first two weeks of May, but growth is expected to remain "sluggish" for the foreseeable future.

The CBI's Distributive Trades survey found that 41 per cent of retailers enjoyed a rise in sales volumes over the period to 16 May, but 23 per cent reported a fall.

While the resulting positive balance of 18 per cent was above expectations that sales would be flat, it is broadly in line with more muted sales growth since February.

John Cridland, the CBI's director general, said: "High street sales growth is subdued and is likely to remain sluggish for some time."

However, price inflation was widespread in May, with 71 per cent of retailers hiking their average selling prices on a year ago, with just 8 per cent saying they fell, giving a positive balance of 63 per cent.

Retailers also expect sales growth to continue at a similarly "subdued" pace next month, with a net balance of 14 per cent forecasting growth.

But the retail sector received good news on a potential rise in interest rates yesterday from Paul Fisher, a Bank of England Monetary Policy Committee member. In a speech, he said that lifting interest rates now would be "exactly the wrong thing to do at this precise moment", given the downside risks to the economy.