BAD weather and the latest rise in interest rates slowed sales to their lowest level for a year, according to latest CBI figures.

July's unexpected slump continued into August, resulting on the poorest performance since March 2003.

More than a third of retailers (34 per cent) reported sales were up on a year ago while 32 per cent said they were down.

The balance of 2 per cent compares with 24 per cent in the July survey, and is the lowest since March 2003 when it was minus 13 per cent and sales were in decline.

Nigel Bourne, the CBI’s South East Regional Director, based in Sevenoaks, said: "This is the second successive survey to report an unexpected slowdown in sales.

"It's true that the weather can influence shopping patterns but it seems more likely that consecutive interest rate rises are having an impact on spending.

"If the Bank Of England's strategy of gently slowing consumer spending is working, further rate rises could be put on hold."

Retailers rated sales as average for the time of year and they are optimistic for improvement in September.

The underlying trend in sales growth, measured by the three-month average, has fallen back to where it was in April.