Retail sales fall for second month running

Retail sales volumes fell for the second month in a row in the year to June, according to the latest Confederation of British Industry (CBI) Distributive Trades Survey.

However, the survey reports that retailers expect sales volumes to stabilise next month.

Retail sales volumes declined by -9% in the year to June, compared to a fall of -10% in May, but are expected to remain unchanged in July.

Orders placed to suppliers also declined in the year to June (-10%), albeit at a slower pace than in May (-30%). These are anticipated to fall at a similar rate next month (-9%).

Retailers also reported the firmest stock positions since May 2020 (+33% in June from +25% in May). Stock volumes are expected to remain higher relative to expected sales in July (+26%).

Martin Sartorius, CBI principal economist, said:

“Another contraction in sales volumes attests to the difficult trading environment being faced by the retail sector. Households’ finances are still under pressure from high inflation, which means that demand conditions for retailers are likely to remain challenging in the coming months.

“Retailers continue to be disproportionately affected by the business rates system when compared to other sectors. There is a real opportunity – and a real need – to redesign the relationship between businesses, local authorities, and the communities they both serve.”

The report, which surveyed 140 companies including 59 retailers, also found that internet sales volumes made a comeback in the year to June (+26% from -9% in May), and are expected to maintain a similar level of growth next month (+27%).

It also found that retail sales volumes were reported as “average” for the time of year (+1% in June from -18% in May) and are set to remain in line with seasonal norms in July (-2%).