British retail sales unexpectedly fell in February for the first time in more than a year but retailers still expect to ramp up prices at their sharpest rate in more than a decade, a survey indicated on Tuesday, reported reuters. The Confederation of British Industry said its distributive trades survey's reported sales balance fell to -3 in February from +4 in January, well below forecasts for a reading of +4. Sterling fell after the weaker than expected performance suggested consumer spending could cool quickly this year in the wake of the global credit crunch. "The sharp downturn in UK retail confidence since the spring of last year underlines that UK consumer demand remains in a very precarious state and further downturn should be expected over the coming months," said David Brown, economist at Bear Stearns. "This sounds another clarion call to the Bank of England to keep cutting rates to avert a slide into deeper downturn and possible recession." British retailer John Lewis Partnership, which delivered a strong trading performance over Christmas, reported last Friday that its sales fell 3.4 percent in the week to Feb. 16. It blamed unseasonally warm weather for a week that it described as "one of the toughest in recent memory". The CBI said its quarterly price expectations balance shot up to +48 -- its strongest reading since November 1996 and is sure to worry Bank of England policymakers who are concerned that inflation is about to spike higher even as the economy cools. Retailers are expecting a poor performance in March with the sales expectations balance at -2. "The high street has been slowing gradually since last April and sales earlier this month were very subdued, while prices have risen strongly," said Ian McCafferty, economic advisor to the CBI. "Reflecting the increasingly tough conditions faced by the sector, business sentiment and investment plans have both taken a hit." The CBI's quarterly business situation balance fell to -9 from -1 in November, the weakest since November 2006.
