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LONDON, Feb 23 (Reuters) - British retail sales partially recovered this month from a sharp fall in January, an industry survey showed on Thursday, but companies in the sector were downbeat about the outlook as last year's Brexit vote pushes up inflation quickly.
The Confederation of British Industry's monthly retail sales balance rose to +9 from -8 in January when it suffered its biggest one-month drop since records began in 1983.
A Reuters poll of economists had forecast the index would pick up this month to stand at 0.
Despite the stronger-than-expected improvement, there were signs of caution among retailers who said they were raising their prices sharply in response to higher costs.
"Retailers remain cautious about their prospects, expecting fairly tepid growth in sales volumes next month against a backdrop of rising inflation that is likely to erode households' purchasing power through the course of the year," CBI economist Ben Jones said.
Average selling prices increased at the fastest pace in almost six years and prices look set to rise even more rapidly next month, the CBI said.
Companies scaled back on their investment plans, and employment fell at the fastest pace for two years.
There have been signs recently that Britain's consumers are reining in their spending, after previously showing little sign of concern in the second half of 2016 about the country's decision to leave the European Union at a referendum in June.
Official data released last week showed shoppers cut back on their spending in January. (Reporting by William Schomberg, editing by David Milliken)