Retail sales volumes grew at the fastest pace for two years in the year to September following a decline in the previous month’s figures, according to the latest CBI Distributive Trades Survey.

The survey of 117 respondents, including 55 retail firms, found that sales for the time of year were considered to be slightly above seasonal norms.

Meanwhile, orders placed with suppliers also rose in the year to September, rebounding from a fall in the previous month. Retailers expect continued growth in both sales and orders in the year to October, albeit at a slower pace.

Growth in Internet sales volumes rose in the year to September, to slightly above the long-run average, and are expected to expand at a somewhat slower pace in October.

Within the retail sector, the main drivers of growth in overall volumes were the grocery and clothing sectors. Retailers of furniture & carpets, specialist food & drink stores and sellers of recreational goods reported falling sales volumes over the year to September.

Elsewhere in the distribution sector, wholesalers continued to report above-average growth in sales volumes, which accelerated in the year to September, with growth expected to hold steady in the month ahead.

Meanwhile, motor traders reported rising demand in the year to September, with sales growing at the fastest pace in six months.

Anna Leach, CBI Head of Economic Intelligence, said:

“It’s encouraging to see some vigour returning to the retail sector in September, with sales growth picking up from August and consumer demand expected to hold up reasonably well next month.

“But inflation continues to squeeze household budgets, and with the pressure on incomes set to persist, retailers will continue to face a challenging environment.

“The Government has the opportunity to provide a fillip for retailers in the forthcoming Budget - particularly those maintaining a physical presence on the High Street - by bringing forward the switch in the indexation of business rates from RPI to CPI.”

Retailers:

· 56% of retailers said that sales volumes were up in September compared with a year ago, whilst 15% said they were down, giving a balance of +42% - the highest since September 2015 (+49%). This was also above expectations (+19%).

· 37% of respondents expect sales volumes to increase next month, with 14% expecting a decrease, giving a balance of +23%.

· 26% of retailers placed more orders with suppliers than they did a year ago, whilst 13% placed fewer orders, giving a balance of +12%. Orders are expected to grow at a slower pace next month (+7%).

· 24% of retailers reported that their volume of sales for the time of year were good, whilst 12% said they were poor, giving a balance of +13%.

· Internet sales volumes continued to expand in the year to September, at a faster pace than in the previous month (+54%, compared with +34% in August), and above the long-run average (+48%).

· Grocers’ sales volumes rose strongly (+49%), with clothing retailers also performing well (+75%). Retailers of furniture & carpets (-18%), specialist food & drink stores (-45%) and sellers of recreational goods (-33%) reported falling sales volumes over the year to September.

Wholesalers:

· 58% of wholesalers reported sales volumes to be up on last year, and 14% said they were down, giving a rounded balance of +44%, above expectations (+28%). Volumes are expected to grow at largely the same pace next month (+45%).

Motor traders:

· 52% of motor traders reported sales volumes were up on a year ago, whilst 0% said they were down, giving a balance of +52%, above expectations (+31%) with the pace of growth expected to slow next month (+28%).