Retailers expecting a tough Christmas

Retail sales rose in November but the outlook for Christmas trading is less favourable as businesses expect tough times ahead.

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According to a monthly poll by the CBI, 55% of businesses reported better sales in November than in the previous year.

Sales were strongest for grocers and clothing retailers as shoppers started their Christmas shopping early.

The CBI report claims that retailers are expecting the strong sales pattern to continue into December. However, only 11% of businesses expect sales to improve next year, due to the impact of the VAT increase from 17.5% to 20% on 1 January.

A separate report by insurance provider Aviva found that small and medium sized business are not confident about the festive trading period and one in 10 say Christmas will make or break their business.

Almost half (45%) of the 500 firms surveyed say they expect a “difficult” Christmas trading period and only 20% expect strong sales.

Ian McCafferty, CBI chief economic adviser, says: “Confidence remains fragile, VAT is rising in January, and a combination of weak wage growth and high inflation is eating into household incomes.”

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