Retail sales slow as households ‘feel the pinch’
The UK high street returned to “tepid trading conditions” in May as households increasingly began to “feel the pinch”.
Retail sales were broadly flat in the year to May following strong growth in April, according to the latest CBI Quarterly Distributive Trades Survey.
The survey also found that orders placed with suppliers fell modestly on a year ago, following robust growth in April. Year-on-year internet sales growth also slowed and fell below the long-run average.
Total retail sales are expected to rise marginally again in June, but growth is set to remain below the long-run average.
Looking at individual sectors, clothing saw a sharp slowing in sales growth in the year to May, and grocers’ sales were flat after two months of growth. The hardware and DIY sector reported a robust rise in sales.
Tepid trading conditions for the retail sector are taking their toll on hiring and investment. The quarterly survey showed that employment declined in the year to May, for the second quarter running, and is set to fall again in the year to June.
Investment intentions also remained negative for a second consecutive quarter, and retailers once again expect the business situation to deteriorate over the next quarter.
The survey also revealed that average selling prices rose at the fastest pace in six years in the year to May, while the proportion of deliveries from suppliers accounted for by imports fell at the fastest pace in eight years.
Alpesh Paleja, CBI principal economist, said: “Retail sales flattened out this month, as the bounce in April unwound. It’s clear that households are increasingly feeling the pinch, as rising inflation pushes down on real earnings. Taken together with higher import cost pressures from a weaker pound, this is creating a challenging environment for retailers.”
