01 November 2007, 15:23 PM

  • Evidence of a continuing high street slowdown has been published, as the CBI's latest monthly retail survey shows that growth in sales is at its slowest for almost a year.

Thirty-three per cent of retailers reported a drop in year-on-year sales in the first half of October, against 42% who said sales were up.

The rounded balance of more than ten percent is the weakest since November 2006 and, for the third month in a row below the long-term average of +18%, indicating that the impact of five interest rate rises in a year is now being felt by consumers.

Sales were also weaker than predicted for the second month in a row. Expectation remains hopeful again for November (+15%), though sales are set to remain broadly average for the time of year.

The three month average in sales volumes, which tracks the underlying trend, continued its month-by-month slowdown from May’s peak of +36% to +12%, the lowest balance since last December.

The CBI’s October’s Distributive Trades Survey was conducted between 27th September and 17th October, covering more than 20,000 outlets and 40% of retail jobs. There were 146 respondents.

John Longworth, chairman of the CBI’s Distributive Trades Panel and executive director at Asda said, “The high street has seen another month of slower growth in retail sales, and although some retailers are doing better than others, it is clear that the buoyant trading period enjoyed earlier this year has tailed off.

“Although slightly better sales are expected in November, retailers’ hopes have been disappointed for the past few months, and they anticipate only subdued growth in the important run-up to Christmas. As consumers begin to feel the pinch, they will look to retailers who offer them value for their money.”

CBI chief economic adviser, Ian McCafferty, said, “The pace of growth in sales has consistently slowed since the summer, showing that the the five interest rate rises are having an increasing effect on momentum as shoppers tighten their belts.

“With added uncertainty about the economy because of the credit crunch, we can expect this slower pace to continue next year.”