British retailers are reporting the best business conditions since before the financial crisis erupted in 2007 as low inflation and rising wages prompt a surge in consumer spending.
The CBI said in its monthly snapshot of the distributive trades that high street and online sales volumes were well above normal for the time of year, with food and clothes outlets notching up particularly strong performances.
The employers’ organisation said 41% of the 119 retailers polled said business was above average for a September, against 6% who said they were below average. The balance of +35 percentage points was the highest since April 2007.
Retailers believe consumers will continue to spend freely in October and are planning to increase orders with suppliers at the fastest rate in almost five years.
The strong CBI survey followed weak official data for retail sales, which showed a slowdown in high street activity in July and August.
Rain Newton-Smith, the CBI’s director of economics, said: “Low inflation and the recovery in wage growth are helping to stimulate consumer demand, but the slowdown in the global economy and tight margins mean retailers won’t get ahead of themselves as we head into autumn.
“Clothing and the food and drink sectors have led the way, and with the general outlook for the UK economy remaining positive, the expectation is that there will be further encouraging results next month.”
The CBI survey found that 60% of retailers questioned said sales volumes in September were up on the same month in 2014, against 11% that reported a decline. The balance of +49 points was up from +24 points in August.
Howard Archer, UK economist at IHS Global Insight, said it was a “very strong CBI distributive survey for September [and] provides reassurance that consumers are still very alive and kicking”.
