by business editor Trevor Sturgess

Shoppers are still visiting the high street but spending is subdued, according to a survey.

The CBI, the employers’ organisation, says conditions in the retail sector are beginning to stabilise, with flat sales in the year to September and a similar situation expected this month.

It does not see any strong signs of an upturn, saying that spending is likely to remain subdued, especially if unemployment continues to rise.

CBI South East regional director Malcolm Hyde, based in Sevenoaks, said: "After such a difficult summer, it is encouraging to see signs that conditions in the retail sector are stabilising. However, with unemployment rising, wage growth low, and consumers’ building up their savings, spending is likely to remain subdued for some time."

Some sectors have proved relatively unaffected by subdued spending, with evidence that supermarkets and shoe shops are enjoying solid growth.

Car-makers too have seen sales volumes hold steady thanks to the "cash for bangers" scrappage scheme which gives a £2,000 discount - £1,000 from the Government and similar sum from the dealer - for cars over 10 years old part-exchanged for a new model.
Most other sectors have seen falling sales, although the pace of decline is easing for clothing, furniture and carpets.

Industrial materials, builders’ merchants and electrical installation materials were the hardest hit, but durable goods sales remained flat.

On a positive note for retailers, Mr Hyde said spending could rise ahead of the restoration of the 17.5 per cent Vat rate, up from the temporary rate of 15 per cent, in the New Year.

"In the months running up to Christmas we may see some shoppers bring forward spending to beat the planned Vat rise. After months of heavy de-stocking, retailers may now be starting to think about getting new products on the shelves."