Consumer climate remains gloomy
Consumer climate remains gloomy
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Wednesday, 29, Mar 2006 05:24
Consumer sales remained subdued in March, dashing hopes of an imminent high-street upturn.
According to the latest Distributive Trades Survey (DTS) by the Confederation of British Industry (CBI), 35 per cent of retailers reported falling sales, with just 18 per cent reporting an upturn.
This balance of -16 was a slight improvement on February's -18 reading, but continues a bleak retail trend so far this year following a modest upturn over Christmas.
Retailers also remain pessimistic about the future outlook, with a balance of minus seven per cent of retailers predicting a further sales fall in April.
John Longworth, Asda executive director and chairman of the CBI's DTS panel, warned that retailers are increasingly feeling the pinch.
"The marginal improvement on February is cold comfort to retailers, who continue to face the same tough conditions - subdued sales allied with rising costs," he said.
"Companies' profits remain hemmed in on all sides by rising rent, rates and energy costs, as well as environmental taxes and the minimum wage."
The survey showed that the unseasonably cold weather across the country during March hit clothing retailers in particular, as shoppers held off buying new spring ranges.
However, the wintry conditions benefited the chemist sector, which reported year-on-year sales growth for the first time since December 2004.
Sales of household goods also showed an improvement, suggesting that the modest upturn in the housing market over the past few months is beginning to be reflected on the high street.
Despite these slight improvements, Mr Longworth believes that the sluggish consumer climate would benefit from a rate cut in order to restimulate spending.
"There is still room for a quarter point cut in interest rates over the next few months to help stimulate consumer demand," he said.