John Longworth, Chairman of the CBI's DTS Panel, said: "These results confirm that the strong growth in May and June was boosted by sales of items related to 'Euro 2004'. Unfortunately the end of the football competition has coincided with the increasing impact of interest rate rises on consumer spending and poor summer weather for most of July. The Bank of England's objective of gently slowing this sector of the economy appears to be working, but it must continue to be cautious. Business wants to see a gradual, well-signaled approach to monetary policy when the MPC meet."

The latest monthly Distributive Trades survey covered 20,000 outlets of companies responsible for 40 per cent of employment in retailing, between June 30 and July 21. Following two months of strong growth in May and June, the underlying trend was high in July at plus 39 per cent, but weaker compared to June’s 41 per cent, which represented the fastest rate of growth since October 2001.

Most sectors reported an increase in growth except for grocers and confectioners who reported a decrease. The majority of companies reported average sales, with 23 per cent having good sales figures and 22 per cent poor.