Although the UK retail sales balance moved in the upward direction last month, yet industry experts predict woes will scare the retail sales in future too.

According to a monthly survey conducted by the Confederation of British Industry (CBI) for distributive trade, UK retail sales remained stagnant in March 2008 against the expectations of decline in view of credit crunch in the country. But industry experts expect significant weakening of consumer spending this year, as reported by Guardian.

The CBI also unveiled that retail sales balance defied all apprehensions by rising from –3% in February 2008 to +1% in March 2008, and ruled out the prediction of going down to –5% and retailers’ own forecast of –2%. Still, retailers lack confidence and are expecting that it will drop, though the balance moved to an easier –3.  Durable goods apparently were the worst hit in wake of sluggish housing industry. Durable goods continued their falling trend in the fifth month in a row (since November 2007) with balance reaching the lowest level since October 2005.

Industry experts said that change in retail sales growth movement was a modest improvement on Mother’s Day and Easter in March 2008, which were also temporary reasons for sales increment.

However, another main reason for volatile retail sales in the country is that consumers are unwilling to make long bills. The impact of sluggish UK housing market is also visible on the consumers’ purchasing. Besides, the country is struggling with severe credit crisis, which is restraining consumers from expending in the retail market. Including these, other factors for slow growth in the retail industry are rising unemployment, declining wages, and less disposable income.

The current situation is likely to remain in future and the country’s housing market may see tough time ahead as giant lenders, including First Direct, Chelsea Building Society and Cheltenham & Gloucester, tightened the lending procedure and hiked the interest rate to 7.1%, an increase of 0.57%. They are going to further increase interest rates on fixed rate mortgages to 0.2%.

“Tight lending practices in the UK refrained Brits from easy access to credit, impacting the consumer spending and retail sales radically. Also, the lenders are raising interest rates that will pressurize the consumers even further to cut down their expenditure. This reflects irresponsible behavior on part of UK lenders”, said a Research Analyst at RNCOS.