Scottish high street remains fragile despite retail bounce By SCOTT REID Published on Thursday 3 May 2012 04:18 BUSINESS leaders yesterday warned that conditions on Scotland's high streets remained "fragile" as official figures suggested the nation's tills were ringing more loudly than those south of the Border. Read the Retail Sales Index report for the first quarter of 2012 According to the latest Scottish retail index, sales volumes grew by 0.7 per cent in the first quarter of 2012, leading to an annual growth rate of 0.6 per cent - just ahead of the UK-wide figure of 0.4 per cent. The growth, while still modest, follows flat sales volumes over the past two years and suggests shoppers may be loosening their purse strings despite a backdrop of sticky consumer inflation and employment uncertainty. Retail sales by value grew by 0.9 per cent north of the Border in Q1, giving an annual rate of 3 per cent as inflation remained well above the Bank of England's 2 per cent target level. CBI Scotland said its own research showed that the "situation on our high streets remains fragile," with consumers still holding off from buying bigger-ticket items. David Lonsdale, CBI Scotland's assistant director, said: "If, as expected, inflation falls further later this year, then we may well see more growth in retail sales, but as long as high unemployment and sluggish wage growth dampen confidence, spending will remain tight. Retailers report that they are taking a cautious approach towards investment, and unfortunately the Scottish Government's new £95 million business rates tax on retailers is unlikely to help. Yesterday's figures are a component of the Scottish quarterly GDP publication, and account for some 5.3 per cent of the economy. The 0.7 per cent rise in sales volumes follows a 0.9 per cent hike in the final quarter of last year. Finance secretary John Swinney said sales on an annualised basis were "on an upward trend again," but acknowledged the obstacles faced by the sector. "This expansion is welcome but the sector continues to face challenging conditions," he said. The Scottish Government is doing what we can to maintain Scotland's position as the most supportive business environment in the UK. Research disclosed by Scotland on Sunday, The Scotsman's sister paper, showed that Scotland's high streets are suffering from a widening prosperity gap as investment is increasingly focused on key locations. The findings from property agency Ryden also revealed that rents have fallen sharply in many large centres, indicating lack of interest among potential store occupiers.