Shops feeling the pinch as sales tumble again

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The figures for June — which were worse than economists had predicted — will worry retailers ahead of January's VAT hike announced in yesterday's emergency Budget, which is expected to further hit demand.

However, sales of food and big-ticket items were up as Britons splashed out on new television sets to watch the football.

Retailers hope the World Cup boost will pick up in the next survey, which includes the last two weeks of June.

Ian McCafferty, chief economic adviser at the CBI, said: "High Street sales weakened slightly this month after a mixed performance across the sector. Retailers are hopeful that sales will strengthen next month.

"As the survey pre-dates the emergency Budget, news that the feared rise in VAT will not take effect until next January may well also encourage some advance spending over the second half of the year."

The CBI distributive trades survey showed a balance of -5% of retailers reporting that sales were down year-on-year. That was up from a 14-month low of -18% in May but still well down on the +13% which was reported in April.

Howard Archer, chief UK and European economist at IHS Global Insight, said: "It is hard to be optimistic about the prospects for consumer spending.

"Households face serious headwinds, notably including high unemployment, muted earnings growth, elevated debt levels, high fuel prices and January's VAT hike."