BBC News Online: Business

UK shoppers shrug off gloom

Despite the upbeat findings the CBI says another cut in UK interest rates is needed if the economy is to avoid "difficult times".

The Bank of England is currently meeting to make its monthly decision on whether to change UK rates.

On the up

The positive message from UK retailers comes from the CBI's latest Distributive Trades Survey (DTS).

The study found 62% of retailers saying sales were up in the month of September compared to a year ago, compared to only 8% who saw sales fall.

Grocers reported the sharpest increase, while shops selling footwear, specialist food and durable household goods also did well.

Elsewhere the survey also found car sales increasing rapidly in September, helped by the change to the new format for licence plates.

"The attacks on the United States may have dented UK consumers' confidence but so far there is little evidence of any effect on their spending" said Alastair Eperon, chairman of the CBI's DTS Panel.

More rate cuts needed

But he warned that retailers still remained "anxious" that the global slowdown could dent their business and called for further rate cuts.

"So far consumers seem willing to spend, thereby helping to stave off an economy wide recession. But with inflation under control, another cut in interest rates is needed to steer the economy through difficult times."

The Bank of England's Monetary Policy Committee is currently mulling over whether to cut the UK base rate again.

The Bank last cut rates by a quarter point to 4.75% in the immediate aftermath of the attacks in the US.

On Tuesday, the US Federal Reserve reduced its key lending rate by half-a-percentage point to 2.5%.