Grim February forecast for retailers

High street sales fell for a 10th month in January and a record number of retailers have grim expectations for the month ahead, business leaders said today.

The CBI business group's Distributive Trades Survey showed that a balance of 47 per cent of retailers reported falls in sales in the first two weeks of the year.

And a balance of 52 per cent of businesses expected sales to decline in February - the weakest forecast since the survey began in 1983.

Ian McCafferty, CBI chief economic adviser, said: "Most of the retail sector continues to struggle as the recession bites more deeply and February will be tough.

"It is possible that pre-Christmas discounting by some retailers numbed many shoppers to the allure of the new year sales."

Within the retail market, footwear and leather was the only sector that saw sales grow compared to a year ago.

All other sectors saw sales drop, with durable household goods and clothing retailers reporting the heaviest falls.

Two-month moving average sales weakened to a record low, with a balance of 49 per cent of retailers registering falls in volume.

The CBI said this represented the particularly poor performance of the sector since November.

Mr McCafferty added: "Later this year, we hope to see some benefit from recent interest rate cuts, falling inflation and the Government's steps to kick-start lending.

"But retailers will still have to work hard to coax anxious consumers back into the shops."

Wholesalers fared particularly badly in the first two weeks of January, with a balance of 91 per cent of firms reporting sales had fallen compared to the same period last year, although this sharp rate of decline is expected to ease next month.

Motor traders also saw sales fall for the eighth month in a row. A balance of 68 per cent reported sales falls, but this was not as bad as expected and an improvement on December, when 100% of firms in the sector reported drops.

Those trading in motor vehicles suffered particularly badly this month, with a balance of 79 per cent of retailers registering lower sales.

A balance of 57 per cent forecast further falls in sales in February.