The volume of high street sales was flat in June compared to a year earlier, disappointing retailers’ expectations of growth, the CBI said today.
June’s decline in sales volumes was mainly driven by weakening performance in the two largest sub-sectors – clothing and food.
Clothing sales were flat (-2%), the lowest balance since January 2010 (-12%). Grocers’ sales (+26%) grew at the slowest pace in more than two years (+7% in March 2009). Sales of durable household goods (-85%) and footwear and leather (-82%) fell particularly rapidly.
The latest survey, which spans the period from 27 May to 15 June 2011, revealed 33% of retailers saw sales volumes increase on a year ago, while 34% reported a fall.
The resulting rounded balance of -2% is the first time in a year sales have not grown (-5% was recorded in June 2010) and compares with +18% last month.
The three-month moving average of sales volumes, which smoothes out monthly volatility, weakened slightly in June (+12%), compared to +18% in May.
For the time of year sales were below average: 17% of retailers reported them to be good, 36% said they were poor, giving a balance of -19%.
Looking ahead, retailers expect sales to remain flat next month (+2%).
Judith McKenna, chair of the CBI Distributive Trades Panel and Asda chief financial officer, said: “After a year of growth, high street sales volumes fizzled out in June. Consumers are really feeling the pinch as disposable incomes continue to be squeezed by rising prices and weak earnings growth.
“The cost of living is increasing and petrol prices have risen particularly sharply. Shoppers are budgeting hard and cutting back on their discretionary spending, such as on clothes and big ticket household goods.
“Household budgets are likely to remain tight over the coming months, with inflation edging higher as increases in domestic gas and electricity prices take effect.”
Orders placed by retailers upon suppliers edged down (-5%) and are expected to be flat next month. The volume of stocks in relation to expected demand (+16%) dipped below the long-run average (+18%).
Among wholesalers, 14% reported a rise in the volume of sales in June and 34% a fall, giving a balance of -20%. That is the lowest balance since January 2010 (-38%) and was driven by weaker sales of building and industrial materials.
Among motor traders, 45% saw the volume of sales increase in June, while 55% reported a fall, giving a balance of -10%, unchanged on May’s balance. Sales are expected to be flat next month