UK retailers feel pinch from higher inflation
UK retail sales declined sharply in the year to October, according to the latest CBI Distributive Trades Survey.
The survey of 106 firms, of which 49 were retailers, showed that retail sales fell at the quickest rate since March 2009 – the height of the financial crisis. Overall, sales for the time of year were slightly below seasonal norms. Retailers expect sales volumes to stabilise in the year to November, but orders are expected to see a further decline, albeit at a slower pace. Online growth slowed in the year to October, to a pace just below the long-run average, but is expected to pick up slightly in the year to November. Recreational goods and hardware and DIY performed well, but department stores and specialist food and drink struggled.
Rain Newton-Smith, CBI Chief Economist, says: “It’s clear retailers are beginning to really feel the pinch from higher inflation. While retail sales can be volatile from month to month, the steep drop in sales in October echoes other recent data pointing to a marked softening in consumer demand. This is a critical time for a sector that employs three million people across Britain. The Government can give retailers, especially those on the High Street, some much needed relief in next month’s Budget by bringing forward the planned switch of business rates indexation from RPI to CPI.”