High street trading this month fell to its worst levels in a quarter of a century, an influential survey showed yesterday. In the latest indication that consumers are avoiding the high street, a key gauge of retail conditions from the CBI pointed to sales plunging on a scale not seen since the early Eighties.

The survey said that 61 per cent of retailers had reported that sales in the first half of this month were down compared with a year earlier, against 25 per cent who said that sales were up year-on-year.

The resulting headline balance of minus 36 per cent of retailers reporting increased sales was the weakest since the CBI began to monitor high street trading in 1983 and drastically down from a reading of minus 9 per cent for last month.

City economists said that the findings were consistent with official retail sales figures for this month showing a year-on-year drop - something that has not been seen since the early Nineties. Annual growth in retail sales volumes tumbled in official data for June to only 2.2 per cent, from a buoyant 8 per cent in May.

The CBI's barometer of retailers' future sales expectations also fell to a record low.

While economists issued warnings that the figures should be treated with caution, since they cover only the first half of this month and have not always been a fully reliable gauge to the true state of trading, the findings fuelled fears that a consumer-led downturn in the economy threatens to pitch Britain into recession.

“Evidence is mounting that consumers are now reining-in their spending appreciably in the face of seriously squeezed purchasing power and other significant pressures,” Howard Archer, of Global Insight said.

The CBI's detailed findings emphasised the direct knock-on toll on the high street from the woes of the housing market, with every retailer of both household goods and of furniture and carpets questioned reporting that sales fell this month from last year's levels.

Every part of the high street with the exception of grocery outlets and footwear stores suffered falling sales, the CBI's results indicated.

The survey reinforced City expectations that interest rates will stay on hold next week, and beyond, despite one member of the Bank of England's Monetary Policy Committee having voted this month for a rise.

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