January sales weak, but February outlook positive

Of those surveyed, 39 per cent said year-on-year sales volumes rose in the first half of January, while 34 per cent said they were down. The resulting 4 per cent positive balance is the lowest since November 2006, when the balance was down 9 per cent.

The figures continue the trend of slowing sales volume growth since last April’s peak. However, the performance exceeded companies’ forecast of a 5 per cent fall in sales during the period.

According to the CBI, retailers expect conditions to improve next month, with a balance of 10 per cent forecasting that sales will rise. However, this is still behind the average reported growth for the second half of 2007.

The three-month average sales volume growth, which takes into account anomalies over the period, showed slower growth than that recorded in December.

Sales growth increased year on year in the footwear, furniture and carpets sectors, after a decrease in December. Grocery sales growth “remained firm”, according to the CBI.

Sales growth fell in the durable household goods sector – which includes washing machines and TVs – where a balance of 66 per cent of respondents reported a year-on-year decline, the fastest rate since October 2005, when it plummeted 87 per cent. Clothing, hardware, china and DIY also suffered from disappointing sales growth.

John Longworth, chairman of the CBI's Distributive Trades Panel, said: "The January Sales were a little flat this year and were weaker than the lacklustre lead-up to Christmas.”

He added: "However, this survey and recent CBI manufacturing data show that, while market turbulence is undoubtedly affecting consumer confidence, the economy as a whole is nonetheless bearing up and is continuing to grow, if more slowly.

"Overall, retail sales were still better than expected this month and the high street predicts a slight improvement in February."