According to a report by the Confederation of British Industry (CBI), UK retail sales in May showed a slight improvement compared to the previous month. However, the report predicts that sales will fall below seasonal norms again in June. The data reveals that sales for the time of year were considered “average” at 0%, a significant improvement from April’s -24%. Despite this, retailers anticipate a decline of -13% in June, indicating a lack of confidence in the sector’s performance.

The report also highlights a loss of sentiment among retailers, with expectations of a deterioration in their business situation over the next three months. This marks the sharpest decline in sentiment since November 2020. Additionally, retailers expressed less intention to invest in capital spending over the next 12 months compared to the previous year, with investment intentions at their weakest since May 2020.

The online retail sector is also facing challenges, as sales volumes in the year to May recorded their sharpest decline on record at -59%, since August 2009. While there is some expectation for a slight improvement in the rate of decline next month (-54%), digital sales are still projected to decrease rapidly. Overall, total retail sales growth indicated flat sales volumes in May compared to the previous year, but a modest decline is projected for the coming month.

Order volumes placed with suppliers remained steady in the year to May, with expectations for the same pace in the next month. However, stocks in relation to expected demand have risen above adequate levels in May and are expected to increase further in the coming month. Inflationary pressures also pose a concern, with average retail selling prices growing at a rapid pace similar to February. Retailers expect some easing in selling price growth in the next quarter.

Martin Sartorius, Principal Economist at the CBI, commented on the findings, emphasizing the impact of high inflation and broader economic uncertainty on the retail sector. Sartorius called for government action to support household economic security and the investment ambitions of retailers in order to ensure the long-term prosperity of the UK economy.

The CBI’s report indicates a challenging environment for the retail sector in the UK. Despite the slight improvement in sales in May, the outlook for the sector remains uncertain as retailers scale back their investment plans and face continued inflationary pressures. Government support will be crucial in navigating these challenges and securing the prosperity of the retail industry and the broader economy.

1. CBI Official Website
2. BBC Business News