Retail sales volumes fell at their fastest pace since March 2009 in the year to June, likely impacted by the relatively cooler weather compared with this point last year.

The survey of 88 firms, including 45 retailers, judged sales for the time of year to be below average, although to a lesser degree than in May.

Within the retail sector, grocers were the largest contributors to the fall in sales volumes, with the hardware & DIY and footwear & leather sub-sectors also reporting declines. Notably, the only sub-sector to see rising sales this month was non-store (i.e. internet and mail order) retailers.

But internet sales across the retail sector stalled in the year to June, marking the weakest growth since the question was first introduced to the survey (in 2009). Internet sales growth is expected to pick up next month, albeit at a pace well below the long-run average.

Recent data suggests UK economic growth has slowed noticeably in the second quarter of 2019, as the boost from stockpiling activities in Q1 fades. We expect the UK to return to a subdued growth path further ahead, although risks from Brexit uncertainty and global trade tensions remain heightened.

Alpesh Paleja, CBI Principal Economist said:

“This month’s drop in sales should be taken with a pinch of salt, given the backdrop of last June’s heatwave and the start of the World Cup. But even accounting for both factors, underlying conditions on the High Street remain challenging. Retailers are having to continually compete for the attention of value-conscious shoppers, in the age of digital disruption.

“The new Prime Minister must help support retailers by reducing the high cumulative burden of costs they face. This should start by urgently reviewing the dire business rates system, which is unfairly impacting UK high streets and deterring much needed investment.”


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