Cautious March for consumer spending

Another month has passed and retail sales are cautious in the current economic climate. Retail activity remained subdued in March with high street stores reporting flat year-on-year sales according to the latest CBI Distributive Trades Survey. About a third (36%) of retailers said their sales volumes in the first half of the month were higher than a year earlier while 35% said they were lower. The resulting balance of +1 was marginally better than retailers' expectations (-2), which followed February's figure of -3, the first negative balance since November 2006.

Retailers reported their stock volumes were more than adequate, relative to expected demand, and they have ordered less new stock from suppliers than a year ago. Breaking the sector down, shoes and leather goods were the most in demand with a balance of +58 of retailers reporting year-on-year sales rises.

Ian McCafferty, CBI chief economic adviser, said: "This month's survey has borne out retailers' expectations that the strong growth enjoyed in 2007 has come to an end. "The picture now is of subdued activity as consumers tighten their belts amid the general cooling of activity we are seeing across the whole economy. Wholesalers also saw a fall in sales volumes on a year ago, but the balance of -4 was a lot stronger than the three previous months and far higher than expectations (-35).

Image: empty shopping mall