CBI paints gloomy picture of high street trading

A stronger high street sales performance in February has failed to materialise, according to the Confederation for British Industry (CBI).

Sales growth "ground to a halt", said the CBI, while goods prices rose sharply.

Thirty four per cent of the 157 traders responding to the business organisation's latest 'Distributive Trades Survey' said year-on-year sales volumes rose in the first half of the month, while 36 per cent reported a decline.

The CBI said the resulting 'rounded' balance of minus three per cent was the first negative result since November 2006. A balance is the difference between the percentage of retailers reporting a sales increase and those reporting a decrease.

While grocers were reporting "brisk" sales growth, other housing market and household-related sectors saw significant falls.

Ian McCafferty, the CBI's chief economic adviser, said: "The high street has been slowing gradually since last April and sales earlier this month were very subdued, while prices have risen strongly.

"Reflecting the increasingly tough conditions faced by the sector, business sentiment and investment plans have both taken a hit."

The CBI said that "despite belt-tightening among increasingly cautious consumers and flat retail sales, the prices of goods in the year to February increased at their fastest rate in over a decade, as many retailers felt the pressures of rising energy, food and raw material costs".

Meanwhile, Associated British Foods (ABF), owner of Kingsmill and Ovaltine brands, became the latest food producer to announce commodity price rises were being passed onto customers.