High street sales volumes were lower in July than had been hoped, according to business group The Confederation of British Industry (CBI).
A slump in grocery trading meant that in this month’s CBI Distributive Trades Survey only 33 per cent of retailers saw sales volumes rise in the three weeks to July 19th whereas 38 per cent reported a fall, compared to 45 per cent and 24 per cent respectively in June.
The resulting balance was -5 per cent, the weakest recorded by the CBI since June 2010, and means the three month weighted average fell to +4 per cent down from +12 per cent in June.
Judith McKenna, Chair of the CBI Distributive Trades Panel and Asda Chief Operating Officer, said: “Rising prices, especially for fuel, continue to impact consumer confidence and make life tough on the high street.
“There’s been a fall in real disposable incomes since the beginning of the year with shoppers either cutting back or trading down to make their declining spending power go further.
“With consumer confidence fragile, UK retailers continue to face challenging times.”
Grocery sales volumes during the month were on balance the worst in 30 months at -16 per cent, whilst sales of footwear & leather, durable household goods and hardware & DIY also fell sharply.
The volume of orders placed by retailers upon suppliers fell at the fastest rate since May 2010 and CBI expects a similar decline next month.
Vicky Redwood, Senior UK Economist for Capital Economics, argues that these disappointing figures point to a weakness in demand in all sectors and reflect a struggling economy as we enter the second half of 2011.
“July’s UK CBI distributive trades survey provides further evidence that consumers are reining back their spending,” Redwood commented.
“Food, clothing and household goods all did particularly badly. Accordingly, it looks like the early price discounting which helped to support spending in June was only a temporary fix.”