Retail sales grow despite wage stagnation as clothing and homewares lead the way

HIGH STREET sales saw strong growth in the year to October, according to figures from the CBI.

Next month’s figures are expected to show further growth, as shoppers remain undeterred by low wage inflation.

The latest Distributive Trades Survey marked a third month of above-average sales growth.

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However, despite strong headline figures, performance was mixed across retail sectors and overall sales remained below average for the time of year.

The three-month average sales growth was 33 per cent, reaching the highest since February 2011, the CBI said.

Clothing, homewares and grocers performed particularly well over the period, while chemists and specialist food and drink saw sales decline.

Raine Newton-Smith, CBI director of economics, said: “Sales on our high streets are still ticking along and, with similar prospects next month, retail growth is looking more stable.

“The clothing sector in particular appears to be bouncing back after the mild weather in September deterred people from buying their winter warmers.”

Clothing saw a sharp 86 per cent uptick, while furniture and carpet sales climbed 72 per cent.

Grocers recorded a 33 per cent growth rise, as sales in non-specialised businesses were up 51 per cent.

By contrast, chemists saw sales drop 55 per cent, marking a second consecutive fall in sales. Specialist food and drink retailers’ sales contracted by a quarter and hardware and DIY was down 33 per cent.

Orders placed on suppliers rose at a faster pace than expected, the survey found, while stock adequacy also picked up strongly.

Ms Newton-Smith said the recent fall in inflation could boost confidence, as it may “lift the spirits of households by making their budgets stretch further”.

However, the UK continues to face risks related to its recovery, including uncertainty in the Eurozone, conflict in the Middle East and tensions over Ukraine, she said. “This could have an impact on consumer confidence and spending going forward,” she added.

Howard Archer, chief UK and European economist at IHS Global Insight, said the figures provided reassurance that consumers are still spending at a “healthy rate” despite recent economic concerns.

High employment and low inflation will support sales growth; despite this, future wage increases are important, he said.

“It remains questionable how strong consumer spending can be on a sustained basis until current very low earnings growth picks up appreciably,” he said.