May 26, 2015 / 10:03 AM / 5 years ago

UK retail sales growth powers ahead in May - CBI

File photo of a shopper is reflected in a store window on Oxford Street in central London December 30, 2014. REUTERS/Neil Hall

LONDON (Reuters) - British retail sales growth surged in May as expectations for sales next month hit their highest level in more than 26 years, an industry survey showed on Tuesday.

The Confederation of British Industry’s retail sales balance rose to +51 in May, far surpassing economists’ expectations for +17, and up sharply from +12 in April.

The measure of expected sales for June rose to +58, the highest reading since September 1988, and up from +40 in May.

“Low inflation, which we expect to remain below 1 percent for the rest of the year, has given household incomes a much-needed boost and greater spending power,” said Rain Newton-Smith, director of economics at the CBI.

“Overall the outlook is bright for firms on the high street, but challenges still remain, especially for food retailers, who are still feeling the heat of stiff price competition from new entrants to the sector.”

The survey also showed the volume of orders expected to be placed with suppliers next month rose to its highest since September 1996.

Quarterly data also released by the CBI on Tuesday showed that retailers’ overall assessment of the business situation improved to +20, the highest reading since last August, from +11 in February.

Official data last week showed British retail sales surged in April as consumers took advantage of falling prices, and unusually warm weather encouraged shoppers to buy new clothes.

Reporting by Andy Bruce, editing by David Milliken

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