The UK retail industry experienced its worst month of growth since the weeks following the Brexit vote, according to a new survey.
The slowdown in growth came after data from the Confederation of British Industry (CBI) showed a worse-than-expected decline in household consumption in the second quarter.
The CBI’s survey coincided with the release of the Office for National Statistics’ second estimate of quarterly GDP, which showed growth in private consumption slowed to just 0.1 per cent in the three months to June.
Soaring inflation linked to the Brexit vote-induced collapse of the sterling contributed to a -10 per cent reading on the CBI Distributive Trades Survey of 117 firms, down from 22 in July.
The news comes as the pound’s collapse continues to affect rising import costs for goods and deteriorating consumer confidence.
CBI head of economic intelligence Anna Leach said that despite the warm start to the month, retail sales “cooled” as inflation continued to outstrip wage growth and shoppers cut back on spending.
“Meanwhile, deteriorating sentiment regarding the business situation has combined with falling headcount among retailers,” she said.
“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.”
The CBI said grocers saw stable sales year-on-year following strong growth last month, but specialist food and drink stores reported another month of significantly falling sales.
The survey also showed that employment declined in the retail sector in the year to August at the fastest pace since 2009, with a similar reduction in headcount expected next month.
The economic pain is also set to worsen, with sterling tipped to reach parity with the euro by the end of the year as the government continues its Brexit trade talks.
CBI said business among retailers was set to continue to deteriorate over the next three months for the third quarter in a row.