CBI July retail sales up at fastest rate in 3 years

The shadows of shoppers are cast onto the ground in Birmingham, central England March 24, 2009.

LONDON (Reuters) - Retail sales grew at their fastest pace in three years in July, and retailers were their most upbeat in 6 years about the prospects for August, a survey by the Confederation of British Industry showed on Tuesday.

The CBI's monthly distributive trades survey's reported sales balance jumped to +33 in July from -5 in June, beating analysts' forecast for a reading of zero, as discounting, the World Cup football tournament and warm weather boosted sales.

It was also three times better than retailers themselves had expected. And stores expected sales growth to strengthen further next month, with an expected sales balance for August of +45 -- the highest since June 2004.

However, the figures had been flattered by a reweighting of the survey. Under the old methodology, the July reported sales balance would have been +21 and August's expectations balance would have been +33 under the old system.

"High street sales have performed well this month, with growth better than retailers predicted. Annual summer discounts and warm weather helped lift sales of clothing, while grocers and durable household goods retailers appear to have benefited from a World Cup boost to sales of food, drink and new televisions," said Lai Wah Co, head of economic analysis at the CBI.

The survey was conducted between June 23 and July 14, with responses from 71 retailers.

The CBI said its July survey had been reclassified and reweighted to bring the data in line with the latest UK and European Commission official classification system.

(Reporting by Christina Fincher)