YEAR-ON-YEAR growth in UK retail sales volumes has slowed sharply this month, a survey from the Confederation of British Industry shows.
With 26% of retailers reporting a year-on-year rise in sales volumes in this month’s survey and 21% posting a decline, only a net 5% reported an increase.
This marked a significant deterioration from the previous monthly survey, in which a balance of 23% had reported a year-on-year increase in sales volumes.
Howard Archer, chief economic adviser to the EY ITEM Club think-tank, said: “October’s weak CBI survey fuels suspicion that consumers may be a bit more restrained in their spending in the near term at least, as their purchasing power is still relatively limited while confidence is fragile. A number of factors may also limit consumer spending.
“With the savings ratio being very low, consumers may be keen to avoid further dissaving. The August rise in interest rates may have reinforced consumer caution. Meanwhile, lenders have cut back on the availability of unsecured consumer credit.”
The weak CBI survey, conducted between September 27 and October 17, follows figures from the Office for National Statistics showing retail sales volumes in Great Britain fell by 0.8% month-on-month in September.
However, having been buoyed by the World Cup and the heatwave in July and August, the ONS figures show retail sales volumes were up by 1.2% quarter-on-quarter during the three months to September.
Alpesh Paleja, CBI principal economist, said: “Retail sales have begun to cool, as the boost from the summer heatwave and World Cup celebrations fades away.
“It’s clear the challenges facing the retail sector are significant. The double whammy of the sluggish recovery in household incomes and digital disruption is making trading conditions tough, and prompting a deeper structural shift in business models.”
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