CBI retail sales gauge slides to lowest level since May

UK retail sales fell to their lowest level in January since May 2020 as lockdown takes its toll, according to the latest survey from the Confederation of British Industry.

The CBI’s monthly gauge of retail sales slid to -50 from -3 in December, coming in below consensus expectations for a reading of -33. Meanwhile, the gauge for sales expectations for February came in at -47%, hitting the lowest level since July.

CBI economist Ben Jones said: "Today’s data brings home the ongoing challenges of lockdown for the retail sector, as sales volumes weaken once again. On the upside, while the headline balance points to a fall in sales across many sub-sectors, the experience of the past few months suggests the decline won’t be anything like as severe as in spring 2020.

"With the lockdown likely to remain in place in the near-term, retailers expect this weakness to continue. It is therefore vital that government support continues in parallel to restrictions.

"To alleviate some of the stress on our struggling high streets, the business rates holiday should be extended for at least another three months to those businesses forced to close. In the longer-term there must be a fundamental review of business rates. A reformed system can play a key role in driving essential investment across the UK."

The survey of 133 firms, including 66 retailers, was carried out between 22 December and 14 January, a period in which restrictions across the UK gradually tightened, with the whole country in full lockdown by 5 January.

Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said: "The CBI’s survey is broadly consistent with our assumption that retail sales volumes will fall by about 5% month-to-month in January, in response to the imposition of the current lockdown.

"The reported sales balance fell to its lowest level since May, though as it does not reflect the magnitude of any changes in sales being experienced by retailers, it would be overly pessimistic to assume that sales will decline to May’s level, which was 15% below December’s.

"The list of retailers that still can open is broader than in Q2, and non-essential retailers are able to provide click-and-collect services. Even so, all available evidence currently suggests that sales in January will fall well below the level during the second, half-hearted lockdown in November."