More evidence of the dreaded double dip

Quite an upbeat survey of the retail sector today from the CBI, reported thus by The Guardian.

High street sales hit three-year high, says CBI

CBI survey reveals retail sales growing at fastest rate since April 2007, boosted by price reductions and warm weather. Julia Kollewe guardian.co.uk, Thursday 26 August 2010 12.00 BST

A CBI survey has revealed high street sales growing at their fastest pace since 2007 boosted by summer sales and warm weather. Photograph: Luke MacGregor/Reuters

Retail sales are growing at the fastest pace in three years, boosted by summer sales, warm weather and the school holidays.

The Confederation of British Industry's (CBI) monthly survey of retailers showed the sales balance rising unexpectedly this month to 35 from 33 in July, marking the highest reading since April 2007. City economists had expected the balance to fall to 20.

"Better sales growth continued in the high street in early August, and retailers are upbeat about prospects in the coming three months," said Lai Wah Co, head of economic analysis at the CBI.

"The summer sales, some warmer weather and the school holidays will no doubt have helped, lifting sales of clothing and shoes, and encouraging households to invest in some home improvements."

The CBI's quarterly survey showed an even stronger performance, with the rise in the retail business situation balance to 22 from 5 in May, giving the highest reading since May 2004.

"The survey suggests that the emerging slowdown in the wider economy has yet to spread to the high street," said Samuel Tombs at Capital Economics. "Nonetheless, we remain convinced that the fiscal squeeze will slow the consumer recovery further ahead."

Well balanced, I'd say. Looks good for the next few months (as it should with the VAT hike looming), but the fiscal squeeze could "slow" consumer spending further ahead.

Over at Gloom Central (aka The Times, led by economics correspondent Grainne Gilmore), they have a different take on it:

Retail surge eclipsed by inflation fears

Two-thirds of high street shops surveyed by the CBI reported a rise in prices compared to last year

High street sales were up to their highest level since April 2007 due to hot weather and hefty discounting, figures out today have revealed.

However, prices are rising at their fastest pace since 1992, according to the CBI distributive trades survey, leading to heightened fears over inflation.

Maybe it's just me -- I mean, my economics degree was a good many years ago -- but isn't there the teensiest hint of a contradiction between "hefty discounting" and "prices rising at their fastest pace since 1992"? Still, you have to hand it to Ms Gilmore. Whether the future brings inflation or a nasty slump, she'll always be able to say "I told you so".