UK retail sales fall sharply in June amid weak consumer sentiment

UK retail sales weakened further in June, with volumes falling at a sharper pace and sales performing below seasonal norms to the greatest extent in more than two years, according to the latest CBI Distributive Trades Survey.

The survey showed that retailers judged sales for the time of year to be poor in June, with the weighted balance worsening to -40% from -35% in May.

That marked the weakest reading since January 2024.

Retailers expect conditions to remain subdued in July, though sales are projected to fall short of seasonal norms by a slightly smaller margin, with a balance of -35%.

Retail sales decline deepens in June

The CBI said retail sales volumes fell at a sharper rate in the year to June, with the weighted balance dropping to -54% from -46% in May.

The weak retail reading followed a downbeat set of business surveys from S&P Global.

While those surveys do not cover retail, they are closely watched as an early indicator of broader economic growth.

Martin Sartorius, Lead Economist at the CBI, said retailers had endured a weak start to the summer.

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.”

Pressure spreads across the distribution sector

The CBI’s survey showed weakness was not limited to retail.

Wholesale sales volumes also remained under pressure, though the pace of decline eased slightly in June.

Wholesale sales volumes fell at a weighted balance of -20%, compared with -26% in May.

However, the downturn is expected to accelerate again in July, with the balance forecast to worsen to -43%.

Total distribution sales volumes also stayed weak.

They declined at a broadly similar pace to May, with the balance at -33% compared with -35% a month earlier.

The CBI said total distribution sales are expected to contract more quickly next month, with the balance seen at -41%.

Motor trades also remained in negative territory, though the pace of decline slowed.

Sales volumes in the sector fell at a weighted balance of -30% in the year to June, improving from -46% in May.

The decline is expected to ease further in July, with the balance forecast at -24%.

Online sales offer a brighter spot

One more positive sign came from online retail.

Internet sales volumes were flat in the year to June, compared with growth of +11% in May.

Retailers, however, expect a stronger performance next month, with online sales forecast to rise at a weighted balance of +37%.

The survey also showed that retail orders placed with suppliers continued to fall, though the pace of decline eased in June.

Orders dropped to -26% from -39% in May.

However, retailers expect orders to be cut back slightly more quickly in July, with the balance seen at -32%.

Retail stock volumes relative to expected sales softened slightly in June.

balance stood at +19%, down from +24% in May, and remained broadly in line with the long-run average of +17%.

Stock positions are expected to stay broadly stable in July, with a projected balance of +16%.

CBI calls for policy stability

Sartorius said the business environment remained fragile and called for greater policy clarity as the UK prepares for a change in leadership.

The survey adds to signs of strain across parts of the UK economy.

A separate CBI survey released on Tuesday showed British manufacturing orders deteriorated this month at the fastest rate since September 2020.