Retail sales hold steady but outlook weakens - CBI
Retailers expect sales to soften in June, a survey showed on Tuesday, as high inflation and the weakening economic outlook weigh on consumers.
According to the Confederation of British Industry’s latest quarterly Distributive Trades Survey, retail sales were broadly average for the time of year in May, with a balance of 0% compared to -24% in April.
Year-on-year, the reported sales balance rose to -1% from -35%, significantly ahead of expectations, for -30%.
But sentiment fell at the quickest pace since November 2020, and a net balance of -13% expect sales to be below seasonal norms in June.
Investment intentions for the year ahead were also at their weakest level since the early stages of the pandemic, in May 2020.
Martin Sartorius, the CBI’s principal economist, said: “The outlook for the sector has worsened, due to high inflation and broader economic uncertainty. As a result, retailers are reining in their investment plans for the year ahead to the greatest extent since May 2020.”
Gabriella Dickens, senior UK economist at Pantheon Economics, said: “The sales for the time of year balance, which is unaffected by base effects, jumped, suggesting that retail sales volumes in the second quarter will be unchanged on their first-quarter level.
“This resilience, however, appears to be coming at the expense of spending on services. The services PMI plunged in May. This fits the pattern between 2008 and 2011, when households shunned services in response to the squeeze on their real wages, but retail sales held firm.”
The Distributive Trades Survey was conducted between 27 April and 13 May. A total of 126 businesses, including 56 retailers, responded.