Market Watch: Retail gloom remains despite spring sales boost

But the latest inflation figures will provide a worrying backdrop for retailers.

The consumer prices index is expected to remain at around 4.5 per cent in figures published on Tuesday, after it shot up from 4 per cent in April to hit the highest level in more than two years.

Tesco and Sainsbury's should have seen sales pick up in April thanks to warm weather and the extra bank holiday for the Royal Wedding. But analysts have warned this was a temporary respite from the tough conditions in the sector and sales are likely to have slowed in May.

Britain's biggest supermarket operator Tesco has struggled to push sales any further in the UK, with market share flat and like-for-like growth slowing down.

The grocery giant has turned to its fast-growing Asian business to offset its weaker domestic market - but the City will be keen to see what plans it has to boost sales at home.

Analysts at Nomura have predicted a 1.2 per cent increase in like-for-like sales for the first quarter, excluding fuel but including VAT.

Nick Coulter, analyst at Nomura, said: "Anecdotally, we believe May saw a small underlying improvement relative to 'pre-Easter' run rates. Nevertheless, we expect the UK consumer environment to remain challenging."

Sainsbury's, the third-biggest supermarket chain in the UK, outperformed the market in the last financial year, posting strong like-for-like sales and profit growth. The retailer's market share also grew, creeping ever closer to number two rival Asda.

The grocer reported a bigger-than-expected slowdown in its final quarter, in the ten weeks to 19 March, but analysts expect this to have reversed in the first three months of its financial year.

Royal Bank of Scotland has forecast like-for-like sales growth excluding VAT and fuel of 1 per cent.

Justin Scarborough, analyst at RBS, said: "We expect a solid start to the financial year, with one-off factors providing a short-term 'spring bounce' to trading."

Majestic Wine has not looked back since it cut the minimum order size at its chain of warehouses from 12 bottles to six in 2009.

Sales at the 161-strong chain have risen sharply while its share price has climbed to a five-year high of over 440p.

Key to its success has been the loyalty of its customer base, which had risen to nearly 500,000 last September and which helped it lift like-for-like sales by 3.7 per cent over the nine-week festive period despite the bitter winter weather. Consensus forecasts for the year to 28 March suggest revenues will grow by 10 per cent to 257 million and pre-tax profits by 22 per cent to 19.5m.

Majestic is one the few Aim-quoted shares to pay a dividend. It increased the interim payout by 17.9 per cent and it may be similarly generous on Tuesday if it meets the consensus forecasts.

Carphone Warehouse also reports on Tuesday, having consistently upgraded its earnings expectations this year.

Its profit-sharing agreement with Best Buy's mobile phone retailing operation in the US is expected to deliver up to 100m in profits for the company.

But the strong US performance has been propping up slower growth in its European mobile phone arm, which in the final quarter saw a 1.7 per cent decline in like-for-like sales.

Nick Bubb, retail analyst at Arden Partners, said although unlikely, closing the European business was an option.

"It's more likely they will announce a freeze on the number of new stores that are going to be opened, although they do have a few more in the pipeline," he said.