Retail sales growth accelerated at its fastest pace for almost 26 years, according to the CBI's latest monthly Distributive Trades Survey, which covers the crucial run-up to Christmas.

CBI: Xmas run-up sees strongest retail sales growth since 1988

Retail sales growth accelerated at its fastest pace for almost 26 years, according to the CBI’s latest monthly Distributive Trades Survey, which covers the crucial run-up to Christmas.

CBI: Xmas run-up sees strongest retail sales growth since 1988

The survey of 122 firms, published on December 19, covers the fortnight ending December 11 and includes the sales-boosting effects of Black Friday. Though sales are expected to rise more slowly in the year to January, robust growth is still anticipated, resulting in the strongest growth in orders placed with suppliers for a year.

A total of 71% of retailer respondents reported sales volumes up on a year ago, while 9% said they were down, giving a rounded balance of +61%, well above the +38% that had been expected and the highest balance since January 1988 (+67%). Sales volumes for the time of year were above average with 22% describing them as ‘good’ against 5% saying ‘poor’, giving a rounded balance of +16%.

Grocers reported the fastest year-on-year growth in sales volumes of any retail sub-sector. 83% said sales were up; 0% said they were down. The balance of +83% is the highest since June 2012 (+85%). Other Normal Goods (which includes watches, jewellery, flowers and plants) was the second fastest growing sub-sector (+79%) followed by Furniture & Carpets (+72%). Two sub-sectors saw sales fall on a year ago: Footwear & Leather (-73%) and Recreational Goods (-25%).

After surging in November, internet sales grew on a year ago again in December, but at a somewhat slower rate. 74% said internet sales were up; 14% said they were down. The rounded balance of +59% is the third highest of the year, but down on the +72% last month.

Retailers expect overall sales volumes to grow again next month, albeit at a slightly slower pace (rounded +35%), with 49% expecting them to rise and 13% to fall. Having slowed sharply in the year to November, the volume of orders placed upon suppliers bounced back. At +24%, it was slightly above expectations (+20%) but retailers predict growth will slow in the year to January (+15%).

Barry Williams, CBI Distributive Trades Survey chairman and Asda chief merchandising officer for food, said: “The strongest sales growth for a quarter of a century is a big boost for retailers as they head towards the climax of the crucial pre-Christmas trading period. Black Friday price-cuts – embraced more widely by more UK retailers than ever – and discounting played an important part in helping sales, encouraging more customers into stores and online to buy more widely.

“But, shoppers may have caught the Christmas bug early and brought some of their spending forward. This has been a tough year for many retailers and parts of the sector are still struggling. Increasing disposable income from real wages growth, and falling fuel prices are giving retailers reasons for optimism. But we’ll need to see in the New Year whether the upbeat mood takes hold.”

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