WIREDGOV

Retail sales volumes fell in the year to August for a fourth consecutive month, and at the fastest pace since March 2021, according to the latest quarterly CBI Distributive Trades Survey. Sales are expected to contract again next month, albeit at a slower pace.

The key survey findings included:

• Retail sales volumes in the year to August fell at the fastest pace since March 2021. (weighted balance of -44% from -25% in the year to July). Sales are expected to continue to contract next month, but at a slower pace (-21%).
• Retailers anticipate a moderate deterioration in their business situation over the next three months (-14% from +6% in May).
• Retailers expect to reduce investment in the next 12 months (compared to the past 12), but to a lesser extent than in May (-25% from -43%).
• Retail employment in the year to August fell for the fourth quarterly survey running, but at a slower pace than last quarter (-20% from -48% in May). Headcount is expected to fall at a slightly slower pace next month (-16%).
• Selling price growth in the retail sector eased slightly in the year to August but is still very elevated by historic standards (+73% from +77% in May). Retailers expect price inflation to match this pace over the next month (+74%)

Martin Sartorius, CBI Principal Economist, said:

“Retail sales in August fell at their quickest pace in over two years, culminating a summer that many retailers would rather forget. Against a backdrop of rising interest rates and weak demand, retailers foresee cuts to investment over the next year, while employment is expected to fall again next month.” 
“Improving the business environment for retailers should start with creating a stable, investment-focused tax regime. The includes building on the Spring Budget, in the Autumn Statement, by making full expensing permanent and expanding the scheme to include hire purchase, leasing, and unincorporated businesses, in addition to freezing business rates from rising with inflation.”

In addition, data from the survey showed:

• Retailers reported that sales were disappointing for the time of year (-9% from -1% in July). Sales volumes look set to fall short of seasonal norms to a slightly greater extent next month (-13%).
• Orders placed upon suppliers continued to fall in the year to August, broadly matching the pace of last month’s decline (-37% from -39% in July). Orders are expected to decline again next month, but at a slower pace (-21%).
• Internet sales volumes continued to decline in the year to August but at a gentler pace than last month (-15% from -46% in July). Online volumes are expected to fall at a broadly similar pace again next month (-14%)
• Elsewhere in the distribution sector, wholesale volumes in the year to August fell at a quicker pace than last month (-23% from -9% in July) but are expected to stabilise next month (0%). Meanwhile, motor traders reported a modest sales pick-up in the year to August (+9% from -27% in July) and expect a broadly similar pace of growth next month (+7%).