Retail sales fall for longest period since 2011

Retail sales fell for the third consecutive month in the year to July, marking the longest period of decline since 2011, according to the Confederation of British Industry (CBI).

Its 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 such as jewellery and 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.

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. The CBI said it expects the economy to grow modestly further ahead, though a no-deal Brexit would likely hit activity and financial markets significantly.

Rain Newton-Smith, the CBI’s 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,” he continued, adding: “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.”

Among the findings, the CBI stated that 26 per cent of retailers said that sales volumes were up in April on a year ago, whilst 42 per cent said they were down. A further 27 per cent of respondents expect sales volumes to increase next month, whilst 29 per cent expect a decrease.

A quarter of retailers reported that their volume of sales for the time of year were good, whilst 45 per cent said they were poor.

Internet sales growth picked up by 39 per cent on the previous month (up just three per cent), but remained below the long-run average of 46 per cent. Internet sales growth is expected to ease slightly in the year to August (up by 35 per cent).

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