Retail sales fell for the third consecutive month in the year to July, marking the longest period of decline since 2011, according to the latest CBI monthly Distributive Trades Survey.
The survey of 93 firms, of which 46 were retailers, showed that sales volumes fell in the year to July, albeit to a lesser extent than in June. Orders placed on suppliers also declined for the third consecutive month, but at a slower pace than the previous month. Both sales and orders are anticipated to be broadly flat next month.
Grocers were the largest positive contributor to headline sales growth this month, reversing fortunes after a large fall last month. However, this was more than offset by declines in other categories, particularly department stores, clothing and other normal goods (e.g. jewellery, flowers).
Growth in online sales recovered after flattening out in the year to June. However, growth remains below the long-run average, and is expected to edge lower in the year to August.
Wholesalers reported no growth in sales on a year ago, but a small pick-up is expected in the month ahead. Motor traders also saw a third consecutive month of falling sales, with a similar decline expected in August.
Across the economy more broadly, growth has been volatile in the first half of 2019, driven by companies’ stockpiling uncertainties ahead of previous Brexit deadlines. We expect the economy to grow modestly further ahead, though a no-deal Brexit would likely hit activity and financial markets significantly. For more detail, see our latest economic forecast.
Rain Newton-Smith, CBI Chief Economist, said: “Whilst last year’s summer strength in retail sales is driving some of the comparative weakness this year, it is still hugely concerning that sales have fallen for the longest period in almost eight years. Despite the recent pick-up we’ve seen in households’ real earnings, the sun is clearly not shining on the British High Street.
“The UK economy has reached a fork in the road. The new Prime Minister must now do everything in his power to achieve a good Brexit deal, thus protecting jobs and our economy.”