THE recent improvement in high street trading has stalled in recent weeks, according to a survey published by the Confederation of British Industry.

UK retailers surveyed by the CBI between September 25 and October 16 signalled that, overall, sales volumes were broadly flat compared with the same period of last year. This flat position followed strong year-on-year growth in UK retail sales volumes signalled in each of the CBI's three previous monthly distributive trades surveys.

Howard Archer, chief UK economist at consultancy IHS Global Insight, said the survey "fuels suspicion" that gross domestic product growth could moderate between the third and fourth quarters.

In the latest CBI survey, published yesterday, 42% of retailers said sales volumes were up on the same period of last year, with 39% declaring they were lower, and 19% reporting a flat position.

The rounded net 2% of retailers reporting a year-on-year rise in sales, a reading interpreted by the CBI as a flat position, was way adrift of a balance of 31% which had in the previous survey predicted a year-on-year rise in volumes in October.

It was also way adrift of respective balances of 17%, 27% and 34% reporting year-on-year rises in sales volumes in the CBI's July, August and September distributive trades surveys.

The grocery sector bore the brunt of the deterioration, reporting a significant year-on-year fall in sales. The grocery sector had reported year-on-year rises in sales volumes for each of the previous four months.

There was also, according to the survey, a sharp slowdown in year-on-year growth in clothing sales.

The CBI survey comes hard on the heels of figures on Friday from the Office for National Statistics, which showed that UK GDP grew by 0.8% quarter-on-quarter in the three months to September.

Mr Archer said: "The October CBI distributive trades survey indicates that consumers are taking at least a temporary breather in their spending after spending at a robust rate during the third quarter.

"The survey fuels suspicion that GDP growth is likely to moderate in the fourth quarter from the robust 0.8% quarter-on-quarter expansion seen in the third quarter."

He highlighted the continuing squeeze on household earnings in real terms, with pay growth continuing to lag consumer price inflation significantly.

However, Mr Archer and other economists noted retailers' optimism that the stalling of the high street improvement in recent weeks would be only temporary.

Of retailers surveyed, 41% projected a year-on-year rise in sales volumes in November and 18% forecast a fall.

Mr Archer said: "With purchasing power currently being limited by consumer price inflation running well above earnings growth, it is likely that many people are feeling the need to rein in their spending at least temporarily, particularly if they want to build up their funds for spending over the Christmas period."

He added: "The key question is whether this is just consumers taking a breather before Christmas or the beginning of a significant period of consumer retrenchment. Retailers themselves seem to believe it is a temporary blip in consumer spending as a relatively healthy balance of +23% expect sales to be up year-on-year in November."