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Business News

Retailers 'hopeful of better times' ahead


The recent recovery in high street sales ran out of steam in April but a survey today said retailers were still hopeful of brighter times ahead.

A balance of 6% of retailers said sales in the first two weeks of April were lower than a year ago, representing a decline from the previous month's flat figure but still well up on the three-year low seen in January, business body the CBI said.

However, April's figures came up against strong figures from the year before when they were boosted by fine weather, while hopes that sales will rise next month were the highest for more than a year.

This suggests that the overall picture for consumer spending is improving despite figures yesterday showing the UK slipped back into recession.

Inflation is set to fall over the course of the year and retailers hope this will weaken the squeeze on consumer spending and boost sales.

Judith McKenna, chairman of the CBI distributive trades panel and Asda chief operating officer, said: "The situation on our high streets remains fragile.

"Consumers are still holding off from buying bigger ticket items, and opting to spend on smaller treat purchases that give them a lift without breaking the budget.

"If as expected, inflation falls further later this year, we may see some growth in retail sales, but as long as high unemployment and sluggish wage growth dampen confidence, spending will remain tight."

The CBI figures highlighted the pressure on supermarkets as the reading for grocery sales fell for the first time since November, reflecting shoppers cutting back to deal with rising food prices.

Furniture and carpet retailers reported a better performance for the third month in a row, while clothing and footwear saw solid growth.

Howard Archer, chief economist at IHS Global Insight, said the survey's results were "modestly softer than expected but far from disastrous".

He added: "It supports the view that the economy is seeing modest underlying growth rather than contraction.

"However, the CBI survey does suggest that the growth upside is currently limited."

But he believes there is a "very real worry" that fragile consumer confidence will take a further hit from the news that the UK is officially back in recession, which could hurt retailers.