CBI reports flat high street sales and expects business situation to deteriorate

UK high street sales were flat in August compared with last year. Despite this being in line with expectations, sentiment about the business situation deteriorated sharply.

In the CBI’s latest quarterly Distributive Trades Survey, conducted over the first two weeks of August, 27 per cent of retailers reported an increase in their sales volume compared to a year ago, while 31 per cent said they had seen a fall.

As a result, the rounded balance of minus-three per cent was in line with expectation of plus-three per cent. At -27 per cent, sales volumes fell further below the average for the time of year.

Twelve of the 13 retailing sub-sectors saw a slowdown to the pace of year-on-year sales growth, with only footwear and leather bucking the trend – growing to 58 per cent from 42 per cent in July.

Orders placed by retailers with suppliers were down when compared with the previous year; the fastest fall rate since January 2012.

Year-on-year shop price inflation is at its lowest since November 2009, following a considerable fall, and retailers now expect to raise prices at a similar year-on-year rate next month.

After a rise during the previous quarter, the number of people employed in retail was down on a year ago, and retailers expect a further headcount reduction in the coming month.

Sales are expected to rise slightly on a year ago in the next month (six per cent) and are expected to be slightly stronger compared to seasonal norms.

Despite this, with a balance of -17 per cent, retailers expect the business situation to deteriorate over the next three months.

Chair of the CBI Distributive Trades Panel and ASDA CEO Judith McKenna said: “Although this summer’s events created a mood of celebration across the nation, these figures would suggest this positivity did not extend to the high street.”

In the wholesale sector, the volume of sales and orders placed upon suppliers fell, with both expected to fall further in September.