Retailers suffered a blow today after it emerged sales growth had fallen to its lowest level for four years.

The Confederation of British Industry's quarterly distributive trades survey said 38 per cent of firms reported higher sales than last year against 36 per cent which said they were down.

In February 2002, 51 per cent of companies were reporting higher sales against only 18 per cent which said they were down.

Last month's balance of two percentage points between stronger and weaker sales contrasts starkly with the balance of 33 per cent in February 2002.

The three-month rolling average of the findings tracks the underlying trend for sales growth.

The CBI said post Christmas sales triggered slightly higher growth, represented by a balance of seven percentage points in January but the stagnation in sales growth seen in December had returned.

Alastair Eperon, chairman of the CBI's distributive trades panel said: "This survey suggests that the modest revival in January was a blip.

"The strong sales growth of 2002 has disappeared and the underlying trend is now for little, if any, year-on-year growth."

Retailers are also less optimistic about the overall business situation for the next six months than at any time since November 2000.

The study found 34 per cent of businesses said sales volumes in February were poor, compared to 19 per cent which said they were good.

There was a balance of 14 percentage points between firms which expected sales growth to pick up this month and those which did not - well below a 25 point figure a year earlier.

Lower short-term expectations for sales reflect the survey's findings on optimism for the wider economy.

Only 22 per cent said they expected the overall business situation to improve in the next six months while 17 per cent believed it will deteriorate.

The balance of five points is the lowest since November 2000.

Overall, retailers said prices were higher than a year earlier and employment was also up.

Mr Eperon said: "A poor February may be partly due to wintery weather which may have put people off shopping.

"But there is evidence worries about the impact of a possible war and the sustainability of house prices are undermining consumer confidence."