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Boost for retailers as sales growth exceeds expectations

27 May 2015

The latest CBI survey of UK retailers has found that growth in sales has accelerated at a faster than expected rate in the year to May.

The organisation's quarterly Distributive Trades Survey of 134 firms including 63 retailers showed that growth in both the volume of retail sales and orders exceeded expectations in May. 60% of the firms surveyed said volumes were up on a year ago, while only 9% said they were down, giving a positive balance of 51%.

Meanwhile, expectations for the next month were at their highest level for 27 years, with 63% expecting them to rise and only 4% to fall.

Rain Newton-Smith, CBI Director of Economics said: “Retailers will be encouraged to see growth in sales and orders on the high street bounding ahead. Low inflation, which we expect to remain below 1% for the rest of the year, has given household incomes a much-needed boost and greater spending power.

“Overall the outlook is bright for firms on the high street, but challenges still remain, especially for food retailers, who are still feeling the heat of stiff price competition from new entrants to the sector. And investment plans have also taken a hit.”

Howard Archer, economist at IHS Global Insight, welcomed the findings and said that it indicated likely growth in the UK economy.  He said: "It is looking increasingly likely that robust consumer spending will help the UK economy regain momentum in the second quarter after GDP growth moderated to just 0.3% quarter-on-quarter in the first quarter. We currently forecast second-quarter GDP growth to improve to 0.7% quarter-on-quarter."

Last week, figures from the Office for National Statistics showed that UK retail sales rose by 1.2% in April, the strongest increase since November.