High street sales strong ahead of VAT rise

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Despite the potential impact of snow and freezing conditions on footfall, the business lobby group reported that a balance of 56% of retailers said volumes were stronger than a year ago in early December - contributing to the survey's highest reading since April 2002 and the sixth strong month in a row.

Hardware and DIY stores benefited from the surge in demand, while clothing, grocery goods and department stores also did well. However, retailers are braced for slower growth from next month when a balance of 35% expect sales to be higher than a year ago, compared with 52% recorded last month.

Ian McCafferty, CBI chief economic adviser, said: "Sales on the high street continued to rise strongly compared with a year ago, reflecting a stronger crucial pre-Christmas trading period.

"However, December's strong survey balance is also likely to capture spending being brought forward ahead of the January increase in VAT. Indeed, retailers expect sales growth to lose some momentum in the new year."

The CBI remains cautious about prospects for the retail sector given concerns over consumer confidence in the new year. VAT is due to increase from 17.5% to 20% on January 4.