British retail sales grew at a much slower pace in July as sales promotions linked to the Euro 2004 soccer tournament ended and as interest rate rises deterred spending, a key survey said today.
But the report from the Confederation of British Industry (CBI) is unlikely to change market views that the Bank of England will raise interest rates by a quarter point to 4.75 per cent when it meets on Wednesday and Thursday.
The CBI said 48 percent of firms said sales were up on a year ago while 24 percent said they were down.
The balance of +24 per cent compared with a balance of +43 per cent in the June survey and was well below the +38 that respondents said in the last survey that they expected for July.
The CBI said following two months of strong growth, particularly in goods such as football clothing, TVs and beer, sales had slowed and are expected to continue to do so during August.
However, the trade group stressed that it was too early to anticipate a sustained slowdown.
"Unfortunately, the end of football competition has coincided with the increasing impact of interest rate rises on consumer spending and poor summer weather for most of July," said Mr John Longworth, chairman of the CBI's distributive trades survey.
The CBI urged the Bank of England to stick to its gradual approach in raising interest rates and not to increase them by 50 basis points at this week's meeting.
"The Bank of England's objective of gently slowing this sector of the economy appears to be working, but it must continue to be cautious. Business wants to see a gradual, well-designed approach to monetary policy when the MPC meet this week," Mr Longworth said.
The underlying trend in sales growth -- as measured by the three-month average - remained strong. The July balance of +39 per cent was just below the +41 per cent in June which represented the fastest rate of growth since October 2001.