Retailers enjoy World Cup and July's warmer weather

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The Independent Online

Retailers expect their purple patch of sales to continue next month after enjoying their best performance in more than three years in July, driven by the balmy weather, the World Cup and summer discounting.

A net balance of 33 per cent of retailers posted a rise in sales, with 51 per cent reporting higher revenues and just 18 per cent a fall, according to the CBI Distributive Trades Survey for July, which was conducted between 23 June and 14 July. This was higher than the expected net balance of 11 per cent and is the best figure since a balance of 44 per cent in April 2007.

The data reinforces the view that most retailers have enjoyed better-than-expected trading in 2010, as consumer spending has held up. Retail sales volumes rose by a higher than forecast 0.7 per cent in June on the previous month, the Office for National Statistics said last week.

According to yesterday's CBI survey, the star performers in July were clothing chains, footwear and leather retailers, and the big supermarkets. Lai Wah Co, the CBI's head of economic analysis, said: "High street sales have performed well this month, with growth better than retailers predicted.

"Annual summer discounts and warm weather helped lift sales of clothing, while grocers and durable household goods retailers appear to have benefited from a World Cup boost to sales of food, drink and new televisions."

A net balance of 45 per cent of retailers expect higher sales volumes in August – the most positive figure since June 2004.

Richard Lowe, the head of retail and wholesale at Barclays, said: "Clothing sales were also helped by the poor weather in April and May, which put many shoppers off buying summer clothes earlier in the season."

But 42 per cent of wholesalers said the volume of trade was lower and 31 per cent saying it was higher in July. The negative balance is 11 per cent, compared to 26 per cent of wholesalers expecting a rise this month.

Retail observers warned the Government's austerity measures are set to take their toll on household budgets and that retail chains face rising cost pressures from inflation in the Far East and rising commodity prices.

Ms Co said: "We still expect the recovery in overall consumer spending to be fairly restrained, however, given concerns about the impact of public spending cuts and weak prospects for real take-home pay in the coming year."