Retail sales struggle as inflation bites - CBI
Retail sales fell in June, a survey published on Thursday found, as surging inflation weighed heavily on demand.
According to the latest CBI Distributive Trades Survey, the retail sales volumes balance slipped in the year to June, to -5% from -1% in May.
Sales were also seen as poor for the time of year in June, with a balance of -19% compared to zero in May, and were expected to remain below seasonal norms in July.
Ben Jones, lead economist at the Confederation of British Industry, said: "Retail volumes are struggling, as high inflation eats away at consumers’ budgets. The squeeze on household incomes appears to have offset any boost to activity from the extended Platinum Jubilee bank holiday earlier this month.
"There is also clearer signs that a downturn in consumer spending is beginning to ripple out across the wider distribution sector, with wholesalers seeing a 14-month period of robust sales growth come to a grinding halt this month."
Wholesale volumes in the year to June were 4%, down sharply on May’s balance of 30%, with only a modest increase expected in July. Volumes were above seasonal norms, but to a lesser extent that the previous month, at 20% compared to 41%.
Retailers deemed stock levels in relation to expected sales as too high, the survey found, and orders placed with suppliers fell to -8% from May’s balance of 2%, the fourth consecutive month of flat or falling quarters. A further decline is expected in July.
On Wednesday, official figures showed that consumer price inflation had risen to 9.1% in May, the highest in more than 40 years. The Bank of England expects inflation to top 11% in the autumn, when household energy bills are set to rise again.
A total of 100 companies, including 39 retailers, were surveyed between 27 May and 14 June for the CBI Distributive Trades Survey. A balance is the weighted difference between the percentage of respondents noting an increase and those reporting a decrease.