UK retail sales slide for third month in a row in July, CBI survey shows

Decline slows but still marks longest period of falling sales since 2011

Strong growth in grocers’ sales was outweighed by steep falls at department stores, clothing retailers and other shops. (Reuters)

Retail sales fell for the third consecutive month in July but at a slower pace than in previous two months, according to latest CBI monthly Distributive Trades Survey.

Out of 46 retailers that responded, 26 per cent said their sales were up compared with a year ago and 42 said sales were down, giving a balance of -16 per cent. The overall decline marks the longest period of falling sales since 2011.

“Despite the recent pick-up we’ve seen in households’ real earnings, the sun is clearly not shining on the British high street,” said Rain Newton-Smith, chief economist at the CBI, which represents British businesses.

Strong growth in grocers’ sales was outweighed by steep falls at department stores, clothing retailers and other shops.

Another measure, which strips out seasonal variations in sales, also pointed to weakness: a balance of -20 per cent of retailers said sales were good for the time of year.

Compared with recent lows, firms expect a slight pick-up in their fortunes in August, predicting sales will be broadly flat on a year ago.

Samuel Tombs, economist at Pantheon Macroeconomics, warned against reading too much into the latest CBI survey, noting: “The survey is derived from a small sample of only 46 retailers, who are mainly high street-based and so fail to capture adequately the shift in households’ spending online.”

The CBI said 10 of the firms that responded described themselves as “non-store”, which means mostly online retailers.

Howard Archer, economic adviser to the EY ITEM Club, also suggested the survey may be too pessimistic. He pointed out that the sharp fall in sales recorded in the June survey is at odds with a healthy rise in sales subsequently reported by government statisticians.

However, the factors that have supported consumer spending this year may be starting to fade, he said. He pointed to a recent slowdown in employment growth and evidence from surveys that pay rises are running out of steam.

In addition, with UK consumers saving a very low share of their income, they may “at the very least” want to stop dipping into their savings, especially given the uncertainty around Brexit, he said.

“Meanwhile, lenders have cut back on the availability of unsecured consumer credit,” he added.

The CBI survey was conducted between 27 June and 16 July.