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Retailers optimistic as high street sales lift in August

High street retail sales increased in August, and most retailers expect that to continue through September, according to the latest CBI Distributive Trades Survey.

According to the report, 53% of the retailers polled said sales had increased compared to the same month last year and 18% reported a decline, resulting in a positive balance of 35%. This was similar to the pace of sales growth in July 33%, and is the fastest since April 2007.

Clothing and footwear was one of the strongest performing sectors in August with a positive balance of 76% fashion retailers reporting an increase in sales volumes.The CBI said this uplift was likely to be a result of better weather at the beginning of August, strong summer Sales and increased spend during the school summer holidays.

The volume of sales on the high street was higher than in August 2009, the second consecutive year-on-year increase, the survey found.

Retailers told the CBI they expect sales to continue growing in September and they are more optimistic about the general business situation in the coming three months.

Price inflation also accelerated. A positive balance of 58% reported price increases in August. This is the fastest pace since February 1992, when 66% reported increases.

Looking to September, a positive balance of 39% of retailers said they expected sales volumes to be higher than a year ago.

In wholesaling, sales volumes rose in August compared with a year ago, despite expectations that they would fall. Of those wholesalers polled, 41% said the volume of trade was up, while 18% said it was down, giving a positive balance of 23%.

Lai Wah Co, CBI head of economic analysis, said: “Better sales growth continued on the high street in early August, and retailers are upbeat about prospects in the coming three months. The summer sales, some warmer weather and the school holidays will no doubt have helped, lifting sales of clothing and shoes and encouraging households to invest in some home improvements.

“Retailers are hopeful that strong sales growth will continue next month. However, the broader outlook for consumer spending is still uncertain, given the VAT rise next year, subdued pay awards and the feed-through of public spending cuts to job losses.”

Commenting on the figures, Richard Lowe, Head of Retail and Wholesale for Barclays Corporate, said: “The latest data from the CBI - the best in three years - chime, to some extent, with the strength of official data reported by the ONS last week. However, there are still underlying issues working against retailers which are making conditions pretty challenging for the sector. Downward pressure on consumer expenditure, rising commodity prices and the impending rise in VAT are all playing on retailers’ minds; although the latter may provide some impetus for sales towards the end of the year.”


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