Booming retail sales dampen Budget hopes

Fresh doubts were cast over the prospects for a tax-cutting Budget yesterday as retailers reported high street sales at their most buoyant level for eight years.

The Confederation of British Industry's latest distributive trades survey shows that the number of retailers reporting higher sales is the biggest since August 1988. Orders placed with suppliers are rising at their fastest rate since January 1988 while the number of retailers stocking up in anticipation of increased demand is higher than at any time in the past 12 months.

After a slight dip in September the boom in sales had returned, said the CBI. For the first time since January 1990 all areas of retailing were experiencing some sales growth.

But it is most pronounced in grocery, confectionery, the off-licence trade and clothing and footwear. Sales of furniture, carpets, hardware, china and DIY goods also benefited from the strong performance of the housing market.

Alastair Eperon, chairman of the CBI's distributive trades survey panel, said: "October's pick-up in annual retail trade is good news for retailers. They will also be reassured that the three-monthly moving average of underlying growth strengthened in October, indicating that consumer confidence is holding up."

However, the CBI is cautioning that the strength of consumer demand reinforces the need for the Chancellor, Kenneth Clarke, to opt for a cautious and prudent Budget. Adair Turner, the CBI's director general, voiced concern yesterday that a tax giveaway Budget might have to be paid for with higher interest rates which would, in turn, put upward pressure on the pound and hit exporters.

The CBI survey covers 15,000 retail outlets employing 40 per cent of all high street staff.