Consumer spending fears hits retailers

| February 24, 2011

According to the latest Confederation of British Industry (CBI) distributive trades survey, retailers are concerned about consumers tightening their purse strings amid rising inflation.

The CBIa��s survey established that the sales balance fell to +6 this month from +37 in January – far below expectations of a +30 reading.

Furthermore, retailers expect sales growth to slow further next month, with the sales balance projected to fall to zero.

Retailers experienced a lift in the early part of January – as shoppers rushed to beat the VAT hike, which came into effect on the 4th.

Commenting on the survey, Lai Wah Co, head of economic analysis at the CBI, said: “Retail sales are likely to be more challenging over the coming months.

“At the same time, prices are set to rise considerably as the VAT increase and the soaring cost of raw materials are passed on to shoppers,” she added.

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