RETAILERS suffered their worst sales performance in 11 years last month after war fears wrecked consumer confidence, figures showed.

The Confederation of British Industry said only 28 per cent of firms reported better sales in March than a year earlier, with 41 per cent saying their performance was weaker.

The balance of minus 13 per cent is the first significant fall since January 1999 and the poorest performance since July 1992's return of minus 15 per cent.

Ian McCafferty, the CBI's chief economic advisor, said: "Sales growth has stalled in almost every retail sector.

"These results confirm our fears that consumer confidence has been affected by uncertainties surrounding the war in Iraq, the impending tax rises and worries about the housing market."

He said the fall also came despite attempts by retailers to prop up consumer confidence with price cuts: "They will hope that the Budget does nothing further to keep people away."

The figures from the CBI's monthly distributive trades survey were greeted with surprise as the City had been forecasting a slight improvement in sales volumes following a disappointing performance in February.

Demand weakened across all retail sectors except hardware, china and DIY where significant sales growth was recorded.

The CBI added the outlook remained grim, with expectations among retailers now the weakest for eight years and stocks down at their lowest level in two years as firms cut their orders with suppliers.