High street sales growth remained ‘subdued’ in May, with retailers expecting a similar pace of growth next month, says the CBI.
High street sales growth remained ‘subdued’ in May, with retailers expecting a similar pace of growth next month, says the Confederation of British Industry (CBI).
Some 41 per cent of retailers saw the volume of sales rise in the two weeks to 16 May, while 23 per cent reported a decline, compared to the same period a year ago, according to the CBI’s latest quarterly Distributive Trades survey.
The resulting balance of +18 per cent was above expectations but in line with sales growth since February.
The CBI warns that price inflation is still high, with 71 per cent of the 139 companies surveyed saying that average selling prices are up on a year earlier, and 8 per cent saying they fell, giving a balance of +63 per cent.
John Cridland, CBI director general, explains that high street sales are ‘likely to remain sluggish for some time’ as household budgets continue to be squeezed by the gap between price inflation and weak wage growth.
However, he is positive about the outlook for Britain’s retail industry, commenting: ‘Given these challenging consumer conditions, it is good news that retail sales growth is stable, not falling.’
The CBI says the Royal Wedding accounts for the better than expected growth in sales volumes, which achieved a resulting balance of -2 per cent, compared to the -18 per cent predicted last month by retailers.
Looking ahead to June, 35 per cent of retail businesses predict that sales will increase, while 21 per cent believe they will decline, giving a balance of +14 per cent.
Judith McKenna, chair of the CBI Distributive Trades panel and chief financial officer at ASDA, warns that retailers will have to make their prices as competitive as possible in order to encourage consumers to part with their money.
‘Family spending power is at a very low level, and with the continuing bite of rising utilities and fuel, we are not likely to see an improvement in this situation anytime soon,’ McKenna adds.