HOPES of a bumper Christmas on the high street were raised as new sales retail figures showed shoppers rushing to spend before the January increase in VAT.
Sales are rising at their fastest pace in more than eight years, despite the recent heavy snow, according to a Confederation of British Industry (CBI) survey published yesterday.
The CBI distributive trades survey's December sales balance rose to +56 from +43 in November, the highest index level since April 2002. Analysts had forecast a fall to +35.
The orders balance was the highest since December 1983, rising to +52 from +33, but the expected sales balance for January pointed to a decline in the headline index to +35, the lowest expected reading since July. Hardware and DIY stores benefited from the surge in demand, while clothing, grocery goods and department stores also did well. Retailers, however, are braced for slower growth from next month when a balance of 35 per cent expect sales to be higher than a year ago, compared with 52 per cent recorded last month.
Ian McCafferty, CBI chief economic adviser, said: "December's strong survey balance is likely to capture spending being brought forward ahead of the January increase in value added tax.
"Indeed, retailers expect sales growth to lose some momentum in the New Year. We remain cautious about prospects for the retail sector further ahead, given ongoing uncertainty over the resilience of consumer spending."
Howard Archer, UK economist at IHS Global Insight, said: "This boosts hopes consumers are determined to have a good Christmas despite economic worries and uncertainties."
Mr Archer said firms were hoping to avoid more bad weather, which curtails shopping trips and hits supply chains, leaving products stuck at container ports. VAT is due to increase from 17.5 per cent to 20 per cent on January 4.