The high street roared back from the wettest April on record with optimism and the strongest sales growth for more than a year in the first half of May, the CBI said yesterday.
The business lobby group's latest distributive trades survey showed that retailers are defying the worsening crisis in the eurozone, as well as the impact of still-high inflation on consumer wallets.
It also dented the case for further money printing from the Bank of England despite the UK's deeper-than-expected double-dip recession.
The CBI survey gave more proof of improving retail health as the sector claws its way back from a disastrous start to the year, which included a shock profit warning from Tesco.
A 21 per cent balance of retailers reported higher sales in the first two weeks of the month than a year earlier, the best result since April 2011 and far higher than had been expected by the City.
Businesses are also more confident overall for the first time since November last year and the sector is employing more staff than a year ago for the first time since 2003, the CBI added.
Judith McKenna, chair of the CBI distributive trades panel and Asda's chief operating officer, said: "It's encouraging to see high street sales up compared to a year ago, and that business sentiment about the next three months has improved."
The majority of retailers saw sales increase including supermarkets, department stores and furniture outlets, although sales are still below average for the time of year, the survey added.
Mr McKenna said: "The combination of high unemployment, slow wage growth and weak consumer confidence means that the retail sector is likely to remain under pressure in the short term."