Retail sales growth highest in 7 years

New research has found that during the year to August UK retail sales grew at the sharpest pace since December 2014.

The latest CBI quarterly Distributive Trades Survey also found that orders growth hit a record high over the same period.

Sales were also above average for the time of year, to the greatest extent since September 2015.

The survey of 104 companies, of which 42 were retailers, found that while firms expect orders and sales growth to slow next month, both are “ultimately set to remain strong.”

But stock levels in relation to expected sales hit a record low across retail and the distribution sector as a whole. This marks the fifth consecutive month in which a record low has been reached in distribution sector stock levels.

Within retail, the proportion of deliveries from suppliers accounted for by imports also fell sharply, at one of the fastest rates in the survey’s history.
Average selling prices in August increased at the fastest pace since November 2017.

Respondents to the study said they expect this picture to remain broadly similar in the month ahead.

Despite signs of supply chain challenges, investment intentions for the next 12 months picked up in the year to August and are now at their strongest since February 1994.

“A ramping-up in retail sales growth in the year to August shows just how much consumer demand continues to spur economic recovery,” said Alpesh Paleja, CBI lead economist. “While sales growth is set to remain strong, a more definitive shift in household spending towards consumer services is anticipated later in the year – leading to greater normalisation of growth in the retail sector.”

Paleja added: “Furthermore, there are signs of operational challenges still biting, with stock levels reaching another record low and import penetration falling. Disruption is being exacerbated by continued labour shortages, with many retailers reliant on younger employees currently awaiting their jab.”

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