March 27, 2012 / 10:30 AM / 8 years ago

UK retail sales steady unexpectedly in March - CBI

LONDON, March 27 (Reuters) - British retail sales unexpectedly steadied in March, but stores warned that high fuel prices and slow wage growth meant the outlook was poor, a survey by the Confederation of British Industry showed on Tuesday.

The CBI distributive trades survey’s March sales balance rose to zero from -2 in February, in contrast to economists’ expectations of a fall to -6. Durable goods sales fell at their slowest pace since December 2010, and there were also improvements in the clothing, furniture and DIY markets.

“It is encouraging that sales on our high streets are stabilising, and - while we are still not seeing growth - conditions have improved since the end of last year,” said Judith McKenna, the chief operating officer of supermarket chain Asda, which is owned by Walmart (WMT.N).

“However, the general retail outlook remains tough and firms expect volumes of sales and orders to fall next month,” added McKenna, who chairs the CBI survey panel.

The survey’s balance for the expected volume of sales slipped back into negative territory at -4 from +2 the month before, though on a three-month moving average the measure was at its highest since August.

“The squeeze on people’s pockets continues to bite despite a recent fall in inflation, with wage growth modest and fuel costs remaining high,” said McKenna.

British retailers have been struggling as consumer clamp down on spending due to high inflation, muted wage growth, worries about unemployment and government spending cuts.

Official data last week showed British retail sales suffered their biggest monthly fall in nine months in February, while consumer sentiment has also dipped, dampening hopes that British shoppers will help the economy back to health.

Bank of England policymaker Martin Weale said he expected consumer spending to remain weak this year, as Britons fret about job prospects.

(Reporting by Fiona Shaikh, writing by David Milliken)

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