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Consumers start to rein in spending
Retail sales have grown more slowly than expected for a second month running and at a rate significantly below April's three-year high, the CBI has revealed.
by Mark Higgins
The business group's latest distributive trades' survey, covering the first half of June, showed that for 37 per cent of retailers year-on-year sales were up, while for 20 per cent they were down. This balance of +17 is in line with the long-term average, but is the lowest since November last year.Sales volumes were still considered above average for the time of y
Retailers expect sales in July to grow at a similar rate to this month, and although growth in the volume of orders placed with suppliers has slowed a little, it remains above average.
The retail survey was conducted from 30 May to 13 June and 146 businesses, including some of Britain's biggest chains - representing 20,000 outlets and 40% of retail jobs - took part.
The poorer weather during June contributed to clothing sales falling at an annual rate only seen once before in the survey's 24-year history - the balance of -52% was previously recorded in July 2005.
Household-related items also fared less well. Sales of durable goods - such as TVs and fridges - fell year-on-year for the second month running (by a balance of -21 per cent), having recorded strong rates of growth since January. Furniture & carpet sales fell slightly for a net 2 per cent of retailers in that sector and growth in hardware, china & DIY sales slowed from a balance of +62% in May to +36% in June.
John Longworth, chairman of the CBI's Distributive Trades Panel and executive director at Asda, said: “This survey shows consumers are reining in their spending in response to higher borrowing costs.
“A slower housing market is making its impact felt, in particular on sales of consumer durables and more expensive household items. But shoppers are also curbing their spending on everyday things such as groceries and a month of mixed weather did not inspire people to buy new summer clothes.
“Because shoppers' pockets are going to be that bit less deep, retailers will be working harder to attract and keep custom in an even more competitve marketplace.” Wholesalers reported slightly faster growth in annual sales volumes than they did in May, but June's balance of +23 per cent was still slower than expected (+32%) and expectations for July (+16%) are the weakest since August last year.
Among the wholeselling sectors, durable household goods slowed most notably (a balance of +17% in June down from +36% in May) and clothing, textiles & footwear wholesalers reported their weakest sales balance (-75%) since July 2001 (-88%).
Motor traders' sales fell over the year to June (by a balance of -13%), though sales were considered slightly above average for the time of year. Demand remained high for parts and accessories (the balance of +62% is the same as in May), while sales of vehicles fell (-31%) at their fastest since October (-57%).
Tagged as: cbi | interest rates | consumer spending
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