UK retail sales slump in August as sentiment weakens

(Sharecast News) - UK retail sales fell sharply in August as the hot weather extended a "prolonged period of weak demand", according to the Confederation of British Industry's latest Distributive Trades Survey. Retail sales volumes fell at a weighted balance of -48% in the year to August, compared with -26% in July. However, retailers expect the decline to ease in September, to -22%.

Sales were also judged to be poor for the time of year, while sentiment among retailers deteriorated to -29% from -15% in May.

Price pressures picked up, with retail selling price growth accelerating to +35% from +28% in May. Retailers expect inflation to accelerate further next month, to +53%.

Across the broader distribution sector, sales volumes fell at a balance of -27%, after stabilising in July.

"Retail firms grew more downbeat in August as they grappled with sharply falling sales volumes," said Martin Sartorius, lead economist at the CBI, who noted that weak sentiment was weighing on retailers' investment and hiring plans.

Employment also continued to decline, although at a slower pace than in May, while retailers still expect to cut capital expenditure over the next 12 months.

"With parliament returning next week, thoughts will start turning to the Autumn Budget and the steps that the Government can take to restore confidence across retail and the broader distribution sector," he said.