From the TUC

Retail sales growth slowing

27 Jan 2011, by in Economics

The January Distributive Trades Survey figures from the CBI not only tell us what is going on in an important industry, they are another indicator of the strength of the household sector. They’re not brilliant, but they are a bit better than other data, such as last week’s Retail Sales Index.

In December, the gap between respondents who saw trade rise and those who saw it fall was 56 percentage points, the highest for over 8 years. The gap in today’s figures is down to 37 points, and when the survey asked respondents to look forward to February it fell to 25. This is a downward trend but these figures are no worse than the norm for this time of year. Heavy discounting in the sales may have outweighed the impact of the VAT increase but that may have exhausted shoppers’ enthusiasm for a while. Ian McCafferty, the CBI’s Chief Economist said that

retailers expect the pace of sales growth to slow further next month, and orders placed with suppliers have flattened out. Consumer demand is expected to be weak in the coming months, as the spending power of households is hit by a combination of sharply rising prices and weak wage growth. Retailers can expect a challenging period ahead.