Robust new year sales lift high street

High street retailers have recorded their strongest new year sales growth for three years, according to the CBI's Distributive Trades Survey report.

Half of retail respondents said that January sales volumes were higher than a year ago, while 21 per cent said they were lower.

The balance of 30 per cent is the highest reading for January since 2004 and greatly exceeded retailers' predictions of 4 per cent. A balance of 22 per cent of retailers forecast higher year-on-year volumes for February, even after the surprise increase in interest rates, which came in the middle of the survey.

Orders to suppliers were also strong. A balance of 19 per cent of retailers said volumes were higher than a year ago and this is expected to continue in February.

In addition, the survey revealed that retailers' opinions about sales have reversed. A balance of 9 per cent said volumes were good, the first positive reading since August.

CBI DTS panel chairman and Asda executive director John Longworth said: 'The pre-Christmas growth in year-on-year sales volumes has carried convincingly through into the January sales. It was a much better story than retailers had expected. However, the strong performance of the sector should not mask the fact that there have been individual winners and losers on the high street.

'December's strong showing was driven by some heavy discounting and it is likely that January will be the same. While shoppers have an appetite for the high street at the moment and the prospects for February are promising, we have yet to see the full impact of recent interest rate rises,' he added.

Grocery stores enjoyed more sales success in January, compared with the previous year. However, specialist food outlets reported weaker volumes than a year ago.

Footwear and leather goods were in demand during the month and strong year-on-year balances were also reported for durable household goods, furniture and carpets.

However, clothes sales were flat compared with the previous year - probably a result of the mild weather, according to the CBI.

Wholesalers reported greater sales volumes in January year-on-year, which in turn drove them to place more orders with suppliers than expected.