Decline in high street sales accelerates in August - CBI

Retail sales volumes fell on a year ago in August at the fastest pace for over a year, the CBI said today (Thursday 25th August).

Meanwhile, retailers were the most negative they have been about the general business situation since February 2009.

The CBI’s latest quarterly Distributive Trades Survey found that 31% of retailers saw the volume of sales rise in the two weeks to 16 August, while 46% said they fell. The resulting rounded balance of -14% was in line with expectations (-12%), and the most negative since May 2010 (-18%).

Price inflation on the high street remains above average but +55% is the lowest balance since November 2010 (+45%). The continued rise in average prices isn’t expected to slow much in the coming month, however.

A balance of -11% of retailers said they felt more negative about the business situation over the next three months than they did three months ago, the most negative for 30 months.

Sales growth for the time of year was not considered quite as bad as had been expected, with a balance of -28% compared with -37%. However, the volume of orders placed with suppliers fell (-22%) at the fastest pace since May 2010 (-24%). Orders are expected to fall again next month (-11%).

Looking ahead, retailers expect the volume of sales to fall again in the year to September, but at a slightly slower pace, with 27% expecting a rise and 35% predicting a fall, giving a balance of -7%.

Retailers are scaling back investment plans over the next 12 months, with the balance of -11% the most negative since February 2009 (-26%).

Judith McKenna, Chair of the CBI Distributive Trades Panel and ASDA Chief Operating Officer, said:

“As expected, August was a tough month on the high street. Sales volumes fell at a pace not seen in over a year, as consumers have continued to see their real incomes squeezed by a combination of inflation and weak wage growth.

“This survey suggests that prices will rise more slowly in the coming months, and savvy retailers will continue to offer consumers the lowest prices possible, but with energy and commodity costs still high, families’ spending power looks like being constrained for some time.”

For the third month running, both durable household goods (a balance of -76%) and hardware & DIY (-50%) sectors performed badly, whereas the furniture & carpets sector (+39%) saw sales rise for the third month in a row.

Employment in the retail sector was down slightly again (-7%) on a year ago, although expectations for the next three months (-1%) are the least negative since February 2004 (+2%).

Source : CBI
www.cbi.org.uk/ndbs/press.nsf/0363c1f07c6ca12a8025671c00381cc7/5cdda1aa17d2aa31802578f50054fc91?OpenDocument