Friday, November 5, 1999 Published at 13:39 GMT
Business: The Economy
Retail sales growth slows
Shoppers are returning in the autumn .. but clothing sales are still weak
High street sales failed to meet expectations in October, but the long-term trend remains robust, according to a survey released today.
The Confederation of British Industry's distributive trades survey showed sales volumes at Britain's retailers continued to grow last month but at a slower rate than in September and below retailers' own expectations.
But the survey found retailers remained optimistic that sales growth would bounce back to higher levels next month.
The survey found 43% of retailers reporting a rise in sales in October with 27% reporting a fall.
The positive balance of 16% was down on September's much stronger figure of 33%.
Weak clothing sales
Clothing, footwear and leather shops saw sales decline over the month, confirming the bleak view on October trading given by leading clothes retailer Marks & Spencer earlier this week.
But at the same time off licences, furniture and carpets shops and other household good stores reported the strongest increases in sales volumes.
Alastair Eperon, chairman of the CBI's distributive trades survey panel, said:
"While most retail sectors, particularly those associated with the housing market, continue to report strong growth in sales, others such as clothing, footwear and leather saw a decline in October compared to a year ago."
Plea on interest rates
The CBI also used the occasion to repeat its calls for interest rates to be left on hold at least until the end of the year to allow the recovery to continue.
"We believe that yesterday's rise in interest rates should be sufficient to counter the limited inflation pressures in the UK at present. Interest rates can now be safely left on hold into 2000," Mr Eperon said.
Most economists believe that the Bank of England will now leave rates on hold until the New Year after the second increae in two months.
But markets are betting that rates will go up another 1% by the end of 2000.
Prices still falling
Meanwhile, the British Retail Consortium's latest Shop Price Index, released earlier today, showed retail prices in October were 0.2% lower than 12 months earlier.
A spokeswoman for the BRC said the organisation was "at a loss" as to why the Bank of England's Monetary Policy Committee raised interest rates by 0.25% to 5.5% yesterday in a move to quell growing inflationary pressures on the economy as a whole.
"Average earnings may have risen but spending on the high street remains subdued," the spokeswoman said. "Price deflation is now a reality for retailers. "General inflation is below the Government's 2.5% target with the upward pressure coming from oil prices which are affected by world supply, not domestic demand."
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