High street sales disappoint again

High street sales disappoint again

Sales on the high street were marginally less bad this month than in previous two months but remain disappointing, the CBI said today.

In its monthly survey of retailers, the CBI painted a much gloomier picture than the Office for National Statistics, which last week reported a record surge in shop sales in May because of the unusually hot weather.

"Even after June's modest improvement, the weakness of the CBI's distributive trades survey is still massively at odds with the strength of the official sales data," said Vicky Redwood, economist at Capital Economics.

"The CBI survey, as always, needs to be read with care, especially given that it only covers half of the month. But given the pressures on consumer finances, we still suspect that it is giving the more accurate picture of the state of high street demand. We expect the official measure of sales to drop sharply in June."

The CBI survey showed that 39% of retailers said sales were lower in the first half of June than in the same period last year, while 30% said they were better.

The resulting balance of -9% disappointed expectations of modest growth in sales volumes, the CBI said, but was an improvement on last month's balance of -14% and April's very weak figure of -26%.

The 9% survey balance equates to annual volume growth of just over 2% on the ONS measure, whereas last week's ONS data - which was disputed by some retailers - showed annual growth of 8.1%.

Andy Clarke,.....continued below

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the new chairman of the CBI's distributive trades panel, and retail director of Asda, said: "High fuel prices and concerns about the economy have blunted consumer appetites, and those retailers linked to the housing market are continuing to endure difficult conditions.

"Grocers have had another strong month, and we are seeing people spend more in supermarkets as they focus on the essentials and also upgrade to higher value food ranges instead of having a night out."

The three-month moving average of sales volumes, which levels out monthly volatility, continued its downward trend to a balance of -16% this month, the weakest since December 2005.

Within individual sectors, clothing retailers reported a survey record low in their year-on-year sales growth, and booksellers and stationers also fared poorly. Retailers tied to the housing market, selling durable household goods, furniture and carpets, hardware, china and DIY products, continued to report falling annual sales.

But grocers, including supermarkets, had another month of strong year-on-year sales growth, with a balance of +67% reporting an increase in sales, which was the highest since December 2005. Footwear and leather shops were the only other sector to report sales growth.

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