British retailers faced another challenging month in July and anticipate continued difficulties in August, as adverse weather and persistently weak trading conditions continued to impede demand, according to the Confederation of British Industry (CBI) on Monday.
The CBI reported that its monthly retail sales balance plummeted to -43 in July from June's figure of -24, marking its lowest point since April. Retailers predict the index will rebound slightly to -32 in August, but this remains the poorest projection since February. July was a disheartening month for the distribution sector, with retailers experiencing the impact of a harsh combination of unfavorable weather conditions and persistent market uncertainty, said CBI principal economist Martin Sartorius.
"While the decline in sales volumes is expected to persist into next month, some companies expressed optimism for an improvement in market conditions following the general election," he added. Official retail sales data revealed that sales volumes fell by 1.2% in June compared to May, hindered by unusually cool weather. However, high inflation has also significantly eroded consumers' purchasing power until recently, and overall sales volumes in June remained below pre-Covid-19 pandemic levels in February 2020.
The retail sector's weakness stands in contrast to a slightly more optimistic outlook in other parts of the economy. Wages are now increasing faster than inflation, and overall output rose by 0.4% between April and May, leading economists to revise their growth forecasts for 2024 upwards. The CBI survey was conducted among 49 retail chains between June 27 and July 17.
