Retail sales rise in run-up to Christmas

British retailers witnessed a solid rise in sales in the run-up to Christmas though underlying trading conditions remained tough, according to the latest monthly CBI Distributive Trades Survey.

In the survey of 56 retailers 37% of retailers said that sales volumes were up in December on a year ago, whilst 17% said they were down, giving a balance of +20%.

But growth was slower than expected (+30%), and slightly slower than in November (+26%).

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Alpesh Paleja, CBI principal economist, said: “Retailers have seen decent growth heading into the vital Christmas trading period, although it was weaker than expected. It’s clear that people are stocking up on food for their Christmas lunch, with grocers’ sales driving most of the sales growth seen in December.

“Notwithstanding the sales growth seen in the last couple of months, underlying trading conditions are tough for retailers. We expect the squeeze on real pay for households to last a while longer, so retailers will still face challenging conditions ahead. The Government’s Industrial Strategy is a good start for boosting productivity and living standards, but consistency and determination is needed to make it a long-lasting success.”

More than a quarter (27%) of respondents to the survey expect sales volumes to increase next month, with 10% expecting a decrease, giving a balance of +17%.

Meanwhile, 31% of retailers placed more orders with suppliers than they did a year ago, whilst 20% placed fewer orders, giving a balance of +11%. This was below expectations (+22%)

Internet sales volumes continued to expand at a healthy pace (+41) albeit slower than in the year to November (+46%). Internet sales volumes growth is expected to ease noticeably in the year to January (+21 – the lowest since October 2009).

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