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UK retailers report flat sales and gloomy outlook

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·2-min read
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UK retailers' investment intentions for the coming year were at their weakest level in May. Photo: Mike Kemp/In Pictures via Getty
UK retailers' investment intentions for the coming year were at their weakest level in May. Photo: Mike Kemp/In Pictures via Getty

Retailers in Britain reported average sales for the time of year in May but expect them to dip below seasonal norms again next month as inflationary pressures dim outlook.

The Confederation of British Industry (CBI) found that sentiment in the retail sector deteriorated at the fastest pace since November 2020 as rising costs hits consumer demand.

The year-on-year measure of retail sales growth told a broadly similar story, with sales volumes reported as flat in the year to May but set to fall at a modest pace next month.

Read more: UK consumer confidence plunges to lowest since 1974

Average retail selling prices in the year to May grew at a similar rapid pace to February. Retailers expect selling price growth to ease in the next quarter.

Recent figures from the Office for National Statistics revealed retail sales rose 1.4% in April despite the surge in inflation squeezing household finances and threatening to push the UK into a recession.

Chart: CBI
Chart: CBI

Internet sales volumes fell at their quickest rate on record during the period.

While the CBI expects the rate of decline in internet sales to ease slightly next month, they will remain rapid in historical terms.

Adding to the the lacklustre outlook for activity, stocks in relation to expected demand outpaced adequate levels this month and are expected to rise further above adequate levels in June.

Orders placed on suppliers in the year to May were broadly flat, and are anticipated to remain steady.

Read more: UK private sector slumps as cost of living crisis hits customer demand

Meanwhile, investment intentions for the year ahead stand at their weakest level since the early stages of the pandemic in May 2020.

However, wholesalers reported sales as "good" for the time of year in May, at a broadly similar degree to April.

Motor traders also saw "good" seasonal sales in May, after having been poor in April. Both wholesalers and motor traders expect sales to remain above seasonal norms next month.

Watch: How does inflation affect interest rates?

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