Retail sales fell faster than expected in June following May's modest recovery - CBI DTS June 2024

Retail sales volumes fell faster than anticipated in the year to June, reversing a return to modest growth last month, according to the latest CBI Distributive Trades Survey.

Retailers expect sales volumes to continue falling next month, albeit at a slower pace.

Key findings included:

• Retail sales volumes fell in the year to June, following a modest recovery in May (weighted balance of -24% from +8%). Retailers expect sales to fall at a slower rate next month (-9%).
• Sales were reported to be well below “average” for the time of year (-39% from +2% in May). Sales volumes are expected to remain below seasonal norms in July, albeit to a lesser extent (-29%).
• Orders placed upon suppliers fell moderately in the year to June at a broadly similar pace to last month (-14% from -11% in May). Retailers expect the cutback in orders to continue next month (-16%).
• Stock positions were reported as broadly “adequate” in relation to expected sales (+3% from +16% in May). Stock positions are expected to remain unchanged next month (0).
• Internet sales declined heavily, and at a faster pace than expected in the year to June (-45% from -6% in May). Online sales are expected to fall again next month, but only slightly (-5%).

 Alpesh Paleja, CBI Interim Deputy Chief Economist, said:

“Last month’s nascent recovery in sales proved to be short-lived, with retailers reporting a faster-than-anticipated decline this month. Unseasonably cold weather in June may have played a role, but it’s notable that internet retail sales fell sharply in our survey, too.

Consumer fundamentals are improving, with inflation now at the Bank of England’s 2% target and real incomes rising. But it’s clear that households are still struggling with the legacies of the cost-of-living crisis, with the level of prices still historically high in some areas.

With consumer demand still on shaky ground, an incoming government can help business by ensuring that the UK is the most attractive place to start, grow and run a business. This will require bold action such as delivering a holistic cross-economy solution to the UK’s overly complex business rates system, which is a particular burden for retailers. This would help to alleviate the burden of higher costs.”