UK retail sales normalised in May, but fall expected in June, online awful - CBI
UK retailers reported just “average” sales for the time of year in May (0% from -24% in April), an improvement from a weaker- than-normal previous month. However, overall sales are expected to fall below seasonal norms again in June (-13%), says the latest CBI report.
And sentiment is continuing to lose steam, with retailers expecting their business situation to deteriorate in the next three months (-13%), “marking the quickest fall in sentiment since November 2020”.
Meanwhile, retailers anticipate less capital spending in the next 12 months compared to the past 12 (-34%) – the weakest investment intentions since May 2020.
The picture online isn’t good either, with sales volumes in the year to May falling at their quickest rate (-59%) on record (since August 2009). The rate of decline in digital sales is expected to ease slightly next month (-54%), “but remain rapid in historical terms”.
The year-on-year measure of total retail sales growth told a broadly similar story, with sales volumes reported as just about flat in the year to May (-1% from -35% in April) but set to fall at a modest pace next month.
Furthermore, order volumes placed upon suppliers in the year to May were broadly flat, and are anticipated to remain steady next month.
Chiming with the lacklustre outlook for activity, stocks in relation to expected demand rose above adequate levels in May and are expected to rise further above adequate levels next month.
The CBI also said inflationary pressures “remain strong”, with average retail selling prices in the year to May growing at a similarly rapid pace to February. Retailers expect selling price growth to ease somewhat next quarter.
Martin Sartorius, Principal Economist at the CBI, said: “Despite retail sales returning to their average for the time of year in May, the outlook for the sector has worsened due to high inflation and broader economic uncertainty. As a result, retailers are reining in their investment plans for the year ahead to the greatest extent since May 2020.
He added: “Government action to ensure the economic security of the poorest households and support the investment ambitions of retailers will be crucial to ensure the longer-term prosperity of the UK economy and society.”
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