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UK retail sales volumes fell below seasonal norms in June at the sharpest rate in over two years, according to the latest Confederation of British Industry (CBI) Distributive Trades Survey.
The weighted balance for retail sales for the time of year dropped to -40% from -35% in May, marking the poorest performance since January 2024. Retailers said they expect sales to continue to fall short of seasonal norms in July, forecasting a balance of -35%.
Year-on-year retail sales volumes also contracted at an accelerated rate, dropping to -54% from -46% in May. Firms anticipate a further, albeit slower, annual decline of -45% next month.
Online retail sales growth halted completely, with volumes unchanged compared to an 11% increase in May. However, internet sales are expected to rebound strongly in July to +37%.
Total distribution sales volumes declined at a steady pace of -33% in June compared to -35% in May, with contraction expected to accelerate to -41% next month. Wholesale sales volumes fell by -20%, but the downturn is projected to worsen to -43% in July.
Retail orders placed with suppliers fell at a slower pace of -26% from -39% in May, but are expected to contract quicker in July at -32%. Retail stock volumes relative to expected sales softened to 19% from 24% in May, moving broadly in line with the long-run average of 17%. Additionally, motor trades sales volumes contracted at a slower rate of -30% compared to -46% in May, with the decline expected to ease to -24% next month.
Martin Sartorius, lead economist at the CBI, said: “Retailers reported a gloomy start to the summer, with sales disappointing relative to seasonal norms to the greatest extent in over two years amid depressed consumer sentiment and rising cost pressures. A sharp fall in year-on-year retail sales was mirrored across the broader distribution sector, with wholesalers and motor traders seeing firm sales declines.
“Businesses need clarity and stability at a time when confidence remains fragile. As government transitions to a new Prime Minister, the focus must remain on creating the conditions for growth by tackling the cost of doing business. For retailers and wholesalers, this includes delivering meaningful business rates reform, ensuring the Employment Rights Act avoids diminishing labour market flexibility, and taking further steps to address uncompetitive energy costs.”
