The UK high street outperformed its expectations of a flat first half to February by posting the strongest growth in sales volumes in over two years, and further growth is predicted in March, the CBI said today.

Its latest Distributive Trades Survey also revealed that although price inflation has accelerated sharply, the fall in employment has slowed, and investment intentions have stabilised for the first time in over two years.

Asked how their sales volumes in early February compared against the same period in 2009, 23 per cent said they were lower, while 46 per cent said they were up. The resulting balance of plus 23 per cent is a clear improvement on January (minus eight per cent) and is the strongest year-on-year increase in sales since May 2007 (up 31 per cent). It also bettered retailers’ expectations that there would be little change in sales volumes on a year ago (down one per cent).

A balance of 16 per cent of retailers expect that, compared with last March, there will be further growth next month.

The volume of orders placed on suppliers also improved in line with sales volumes, with a balance of 12 per cent saying they were up on a year ago. A similar rate of growth is expected next month.

A net eight per cent of firms said that sales were poor for the time of year, and the three-month moving average of sales volumes, which smoothes out monthly peaks and troughs, grew for a fourth consecutive month (a balance of plus nine per cent).

Andy Clarke, chairman of the CBI Distributive Trades Panel, and chief operating officer of Asda, said: “Sales have been stronger this month than many retailers predicted they would be, but that’s not surprising as January was impacted by VAT changes and forward buys in December.

“Retailers don’t think February’s growth spurt will be matched in March, but the sector can take some reassurance that job losses are easing off and capital expenditure plans are stabilising.

“While retailers see some growth ahead, the road to recovery through 2010 is likely to be fragile. Worries about the economy and upcoming pay freezes are likely to ensure that shoppers remain cautious.”

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