High Street boom is fading fast

THE retail boom is set to slow sharply in the face of shoppers' concerns about interest rate rises, it was claimed today.

As retailers Arcadia and Matalan reported reduced sales growth, the British Retail Consortium reported a 'significant deterioration' in overall confidence on the High Street.

Its retail confidence indicator, which canvasses opinion from shoppers, retailers and investors, slumped to a 15-month low so far in June, driven by sharp falls in consumer confidence and retail sales.

Store owners enjoyed an almost unprecedented boom for the early part of the year through to Easter. But Arcadia and Matalan both said more recent trading had seen some of the shine come off.

Arcadia, the Dorothy Perkins-to-Burton retail group, said like-for-like sales at its core chains were up 8% in the first 17 weeks of the current half year but had fallen back since the first seven weeks of that period, which saw a stellar 12% performance.

Braced for slowing sales growth, chief executive Stuart Rose said: 'To continue at 8% to 10% is probably not realistic.'

Discount operator Matalan reported like-for-like sales growth for the 17 weeks to 22 June of 5.7%, down on the 7.2% rates reported in May. BRC director general Bill Moyes cautioned the Bank of England against opting for an early rise in interest rates - a move expected by many to be made in August if not at next week's meeting of the monetary policy committee.

Moyes said: 'Consumer confidence will not be helped by all the speculation surrounding interest rates. The Bank of England needs to be wary.'

However, the BRC study contradicted another June survey from researcher Martin Hamblin GfK, which showed consumer confidence holding firm.