Retail sales saw a surprise drop in the first half of May following three consecutive months of growth, according to the CBI Distributive Trades Survey.
The CBI said 47% of retailers reported a drop in sales during the first two weeks of May compared with the same period last year, while only 30% reported that the volume of sales rose over the period, resulting in a balance of 18%.
Retailers are also negative about next month. A balance of 15% expected sales will continue to fall in June.
Employment in the retail sector continued to fall in May and was down 20% on last year.
The survey also showed that price inflation continued to rise. 54% of retailers said average selling prices rose, and 5% said they fell giving a balance of 49%.
A balance of 5% of retailers expected the overall business situation to deteriorate over the next three months.
CBI chief economic adviser Ian McCafferty said: “These retail sales figures for the early part of May are clearly disappointing, with many sectors failing to achieve higher sales than a year ago. Unseasonal poor weather at the start of the month is likely to have dented clothing sales.”
He added: “It appears that shoppers are feeling the pinch again and are being cautious with their purchases, given the squeeze to real incomes from higher prices and only a modest rise in average pay.”
Wholesale fared better than retail with sales volumes up by a balance of 20%. However the performance was lower than the 42% that wholesale suppliers forecasted last month.
Wholesale suppliers predict volumes next month will be broadly unchanged on last year, a balance of 3%.