London (Reuters) – British retail sales enjoyed solid growth in the run-up to Christmas though underlying trading conditions remained tough, a survey by the Confederation of British Industry showed on Wednesday.
The CBI distributive trades survey’s retail sales balance fell to +20 in December from +26 in November, in line with the forecast in a Reuters poll and the survey’s long-run average.
Britain’s economy has slowed this year, in part because a pick-up in inflation driven by last year’s vote to leave the European Union has eaten into consumers’ disposable income.
“Retailers have seen decent growth heading into the vital Christmas trading period, although it was weaker than expected,” CBI economist Alpesh Paleja said.
“Notwithstanding the sales growth seen in the last couple of months, underlying trading conditions are tough for retailers. We expect the squeeze on real pay for households to last a while longer, so retailers will still face challenging conditions ahead,” he added.
The CBI said sales growth was boosted by supermarket spending.
Last week official figures showed that British shoppers pounced on electrical goods and other Black Friday bargains last month, giving an unexpectedly big boost to retail sales.
This contrasted with earlier signs of a subdued start to festive spending from November’s CBI and British Retail Consortium surveys.
December’s CBI survey covered the period Nov. 23 to Dec. 14.
(Reporting by David Milliken, editing by Kate Holton)