Growth in sales made by UK retailers are coming at the expense of profit margins, new data on the health of the retail industry suggests.

Sales were up 2.6 per cent in July compared to 12 months before, and by 0.1 per cent compared with June. It is the seventeenth consecutive month of growth on the high street.

The overall amount spent by UK shoppers increased 1.7 per cent on an annual basis, but slipped 0.1 per cent month-on-month.

But, in less welcome news for shop owners, prices charged for goods tumbled 0.9 per cent year-on-year in July.

Online sales continued to speed ahead, jumping 11.2 per cent in July compared with July 2013, but sales slipped 1.9 per cent month-on-month, largely due to seasonal factors.

Meanwhile, separate figures from the CBI showed confidence being maintained in among the UK’s manufacturing businesses.

In the survey of 414 manufacturers, 37 per cent said output had increased in the last three months, while 25 per cent said it slowed. The balance of 12 per cent was lower than the June reading of 23 per cent.

But manufacturers are confident about the immediate future with 42 per cent anticipating growth and 11 per cent expecting a decline in activity.

Katja Hall, CBI deputy director-general, said: “The outlook for UK manufacturers remains healthy, with both total and export orders firming up. Despite a dip in the pace of output growth, companies expect a strong pick-up in the next three months.”