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Retail sales slip as consumers feel the pinch

Retail sales slipped in recent weeks, marking the first time in a year when sales have not shown growth.

According to the CBI Distributive Trades Survey, 33% of retailers experienced an increase in sales volumes in the period from May 27 to June 15, while 34% reported a fall.

The resulting rounded balance of -2% is the first time in a year that sales have not grown, and compares with +18% last month.  

The last time the survey showed a decline in sales volumes was June 2010, when sales fell 5%.

Looking ahead, retailers expect sales to remain flat next month, at +2%.

The three-month moving average of sales volumes weakened slightly in the period, at +12%, compared with +18% in May.

Grocers’ sales grew at the slowest pace in more than two years, rising 26%.

Clothing sales declined 2% - the lowest balance since January 2010 (-12%).

Sales of durable household goods and footwear & leather fell “particularly rapidly”, declining 85% and 82% respectively.

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.”

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