The pace of retail sales growth slowed sharply in February as prices soared to 1991 levels according to the CBI.
The CBI’s quarterly Distributive Trades survey showed the slowest pace of year-on-year growth for eight months. 30% of retailers polled saw year-on-year sales rise in the two weeks to February 16 while 36% reported a fall, giving a positive balance of 6%.
This is down 21% on last month’s figure and a plunge of 50% from December.
At the same time inflation rocketed with 77% of retailers saying that average selling prices rose on a year ago, and only 4% saying they fell.
The positive balance of 73% is the highest since 1991, up 28% from the last quarter. Prices are expected to remain high in March.
Asda chief financial officer and chair of the CBI Distributive Trades Panel Judith McKenna said: “The VAT increase coupled with the rise in the cost of many raw materials means that retailers are working even harder to deliver value to our customers on groceries and everyday items.
“With family budgets under increasing pressure, many shoppers are putting the purchase of big-ticket items on hold for the time being.”
Retailers predict sales to be flat this year, with 22% saying sales will deteriorate in the next three months against 15%expecting improvement.
Sales volume trends were weak across nearly all retail sectors this month. Durable household goods – down 90% - and hardware & DIY – down 82% - performed particularly poorly; the lowest figures since June 2009 and February 2009 respectively.
Grocery fell to a balance of positive 40%, 30% down on January’s figures, and clothing was down 30% at positive 64%.
Despite stilted growth retailers remained upbeat, with a positive balance of 14% planning to invest more this year than last.
The wholesale sector continued to perform well overall, with the balance of positive 47% of wholesalers reporting a rise in sales volumes.