High street sales dropped below normal in February but clothing retailers bucked the trend, bouncing back into growth during the month.
The Confederation of British Industry’s distributive trades’ survey gave an overall reading of +10 for February, down from +16 on January.
However, 43% of clothing retailers said sales volumes had increased year-on-year, up from 16% reporting a drop the month before.
Despite the positive start, the business lobby group said the high street remains “challenging”, owing to a lack of business rate reform stunting growth.
The survey of 124 firms consisting of 68 retailers revealed that retailers’ outlook for sales in March have eased to their lowest level since 2013.
It also claims retail industry members were looking to slightly scale back investment spending this year.
Respondents do expect an improvement in business conditions over the next three months. Average selling prices crept up for the first time in three quarters, relieving pressure on margins, while orders placed with suppliers were unchanged, better than expectations.
Rain Newton-Smith, CBI director of economics said: “Overall, conditions remain challenging for retailers. Although sales have continued to grow and optimism has risen, expectations for sales growth are lacklustre and retailers are still wary of investing. And unreformed business rates are making it tougher for retailers to open up new shops on the high street.
“But retailers still stand to benefit from the low level of inflation and strong job creation across the economy, which should continue to support household spending.”