UK shop owners are in bullish mood, with evidence from business group the CBI showing that expectations for future trade are at their highest for more than a quarter of a century. Meanwhile Growth in the year to May was also up.

The retail sector is huge and therefore vital to the UK’s economic prosperity. Previous data from a range of sources hinted that the sector’s fortunes were wobbling, but the latest figures will bring fresh impetus to the high street.

Rain Newton-Smith, CBI director of economics said: “Retailers will be encouraged to see growth in sales and orders on the high street bounding ahead. Low inflation, which we expect to remain below 1% for the rest of the year, has given household incomes a much-needed boost and greater spending power.”

There were greater than expected orders placed with suppliers during the month, with growth hitting heights not seen since 2010, while sales in general were well above trend and at their swiftest since April 2007. Firms were confident about future sales and new orders.

Meanwhile, online sales continued their rapid rise, although at a slower pace than anticipated by the statos. The CBI survey reading of 38% was far below the anticipated 59%, but again growth is expected to pick up next month.

Newton-Smith pointed to other blips in the data for retailer, suggesting that food stores continued to feel the heat from ferocious competition in the market and had offset investment plans as a result.

“Overall the outlook is bright for firms on the high street, but challenges still remain, especially for food retailers, who are still feeling the heat of stiff price competition from new entrants to the sector. And investment plans have also taken a hit.”