Retailers eye Christmas boost as high street sales strengthen
The CBI’s latest quarterly Distributive Trades survey revealed that 55% of retailers saw the volume of sales rise in the two weeks to November 10th, while 13% said they fell. The resulting rounded balance of +43% was in line with expectations, and an improvement on October’s balance of +36%. However, a net 6% of retailers said sales in November were below average for the time of year.
Sales grew most strongly in November for grocers and clothing retailers. The three-monthly moving average of sales volumes, which smoothes out monthly peaks and troughs, edged higher to a balance of +43%.
Looking ahead to the crucial pre-Christmas period, retailers expect strong sales volume growth to continue in December (+45%), and a net 11% of retailers expect the overall business situation to improve over the next three months.
After extremely sharp cuts to investment spending during 2008-2009, for a second quarter running, retailers are planning to invest more over the next 12 months, compared to last year (+28%).
Ian McCafferty, CBI Chief Economic Adviser, said,“High street sales growth held up well in November, and retailers are hopeful that the run-up to Christmas will be just as strong.
“However, looking into the New Year, retail sales growth may lose some of its sparkle, as consumers rein in spending after Christmas.
“Confidence remains fragile, VAT is rising in January, and a combination of weak wage growth and high inflation is eating into household incomes.”
Price inflation remains high with 51% of retailers saying average selling prices rose on a year ago, and 6% saying they fell. That gives a balance of +45%, compared to +58% in the August quarter. Prices are expected to rise at a similar pace in December (+42%). Numbers employed in the retail sector fell only slightly in the year to November (-5%).
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