UK retail sales drop sharply in August, miss expectations - CBI
Retail sales in the UK unexpectedly fell in the year to August as inflation continues to bite, according to the latest quarterly distributive trades survey from the Confederation of British Industry.
The retail sales balance fell to -10 - hitting its lowest level since July 2016 - from +22 the month before and missing consensus expectations for a reading of +15.
The survey of 117 firms found that 35% of respondents expect sales volumes to increase next month, with 16% expecting a drop, giving a balance of +19.
CBI head of economic intelligence, Anna Leach, said: "Despite the warmer weather at the start of the month, retail sales have cooled as higher inflation continues to squeeze consumers’ pockets. Meanwhile, deteriorating sentiment regarding the business situation has combined with falling headcount among retailers.
“Looking ahead, firms do expect sales growth to recover, but the pressures on household budgets are set to persist, given little sign of wages picking up.”
Pantheon Macroeconomics said: "The CBI’s reported sales balance is extremely volatile- even more so than the official measure of retail sales- and its exclusive focus on the first half of the month means it often gives a misleading steer. Nonetheless, the survey’s renewed weakness brings it back in line with other indicators suggesting that consumers’ spending has little momentum.
"We had expected retailers to report steady growth in sales, aided by the cooler weather. Average temperatures were one degree celsius cooler than normal in the first half of August, according to the Met Office, so demand for clothing retailers’ new autumn ranges should have been robust. The sharp fall in the reported sales balance, therefore, suggests that the decline in consumers’ confidence and downturn in real wages is dominating any temporary stimuli."