Sustained growth in sales volumes drives rise
Strong demand has driven high street prices in May to the highest level in almost a decade, but retailers expect growth to weaken in the coming months.

The CBI Distributive Trades Survey (DTS) showed that 53 per cent of retailers reported sales volumes up on last year, compared with 21 per cent that reported declines. The balance between the two of 31 represents the sixth consecutive month of growth.

This sustained growth in sales volumes has encouraged more retailers to put up their prices, compared with a year ago. The positive balance of 33 for retailers raising prices is the highest reported since May 1998.

However, the CBI said retail sales growth and rises in prices are likely to soften over the next few months.

Among the sectors with the strongest growth were grocery, hardware, china and DIY, as well as footwear and leather. However, sales of household goods have declined since a year ago. Overall, retailers said sales for this time of year are good and orders placed with suppliers have increased at their fastest rate since June 2004.

Asda executive director and chairman of the CBI distributive trades panel John Longworth said: 'Consumers continued to spend on the high street in May. However, we should not be too hasty in extrapolating recent data into medium term inflationary pressures. Retailers' expectations reveal that the impact of the recent interest rate rises might yet cause consumers to tighten their belts. Sales growth is expected to slow and pricing power to weaken. In addition, lower energy prices will eventually filter through. All this suggests inflationary pressure from the high street will fall back.'