Retail sales growth slows in January

A survey by the Confederation of British Industry (CBI) has showed that January retail sales were the worst for 14 months.

However, this was not as much as analysts had predicted and retailers were more optimistic about the future.

Analysts had predicted no growth whatsoever with the survey suggesting that consumer demand is so far holding up in spite of concerns of a significant slowdown in the economy this year.

The CBI said its distributive trades survey’s reported sales balance fell to +4, its weakest rate since November 2006, from +8 in December.

John Longworth of the CBI said generally, retail sales were still better than expected this month and the High Street does predict a slight improvement in February.

Howard Archer, an economist at Global Insight, said the CBI survey indicates that consumer spending is not collapsing which reinforces the case for the Bank of England to cut interest rates gradually rather than aggressively given current significant inflation risks.

It is broadly expected by analysts that there will be approximately 4 rate cuts during 2008, many analysts fear that the economy could slow significantly as consumer spending dries up and the housing market slows.

Mr Longworth concluded by saying groceries and essentials were still doing reasonably well, however, people are cutting back on spending of expensive items such as washing machines and televisions.

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