High Street spending takes a tumble

COLD, wet weather hit High Street sales in the first half of March, with shoppers reluctant to snap up spring fashions, a leading retail barometer revealed today.

The CBI survey, which will ease pressure on the Bank of England to raise interest rates next week, showed a dramatic slowdown from the boom conditions enjoyed in recent months. A net 17% of retailers reported higher sales than a year ago - the lowest figure for six months and a sharp drop from January's 38% and February's 26%.

But with consumer confidence still buoyant and the underlying trend in sales volumes strong, retailers said the fall was little more than a blip and expect sales to bounce back in April.

John Longworth, newly-appointed chairman of the survey's panel, said: 'Many retailers blame the atrocious weather in March for a dip in sales. However, consumer confidence remains strong so stores will be hoping for some good trading over the Easter holiday weekend.'

Longworth added that, looking forward, confidence could be eroded by increases in interest rates and council tax bills. The survey, conducted between 2 and 17 March, showed sales of clothes and shoes were hardest hit. Stores selling household goods performed well, reflecting the strength of the housing market.

Economists said the CBI findings would hand ammunition to those on the Bank's monetary policy committee urging a delay in the next rate rise. The City is split on whether the MPC will lift borrowing costs by a quarter-point to 4.25% when it meets next Wednesday and Thursday.

A Reuters poll found 27 of 46 pundits quizzed expect the MPC to hold fire next week.