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Summer sunshine boosts retail sales

Retail sales growth picked up in the year to July, exceeding expectations for minimal growth, according to the latest monthly CBI Distributive Trades Survey.

The survey of 111 firms, of which 57 were retailers, showed that the volume of sales grew at a healthy pace – driven by grocery and clothing sales in particular – while orders placed on suppliers rose at a solid pace for a second consecutive month. Overall, sales for the time of year were considered to be slightly above seasonal norms.

Looking ahead, retailers expect steady expansions in both sales and orders in the year to August, at paces similar to those seen this month.

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Growth in internet sales was little changed from last month in the year to July, and marginally below the long-run average.

Elsewhere in the distribution sector, wholesalers continued to report above-average growth in sales volumes, but motor traders reported the fastest drop in sales since November 2013.

Anna Leach, CBI head of economic Intelligence, said: “The warm summer has added a sizzle to our high streets as shoppers defied expectations, with sales growth in clothing shops and grocers driving overall performance.

“But while retailers expect a similar pace of growth next month, the factors underpinning their sales growth are more shaky. Although employment is strong, real incomes are falling in the wake of higher inflation, and that’s expected to feed slower consumer spending growth ahead.”

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