July 18 (Reuters) - British homewares retailer Dunelm

Group ( DNEMF ) forecast its annual profit to be slightly higher

than market consensus on Thursday, encouraged by an increase in

volumes as customers spent on new furnishings to spruce up their

homes.

Dunelm ( DNEMF ) had maintained lower prices for its products over the

year in an effort to lure customers who were grappling with high

household bills, but easing inflation has brought some relief to

companies and customers in Britain.

The company flagged that sales for outdoor furniture was

softer in the fourth quarter due to the extended cooler weather

in Britain, days after discount retailer B&M said wet

weather had curbed demand for seasonal items such as its garden

products.

The retailer added that annual gross margin is expected to

be about 170 basis points higher than the prior year, as lower

year-on-year freight rates have continued to be a tailwind, with

the impact of surcharges mitigated.

Profit before tax for the year ended June 29 will likely be

slightly ahead of analysts expectations of 200 million pounds

($260.14 million), according to a company compiled consensus.

($1 = 0.7688 pounds)