Retail sales fall at fastest rate for 17 months - CBI

Retail sales fell sharply in March, as the British high street continued to battle fragile consumer confidence and Brexit uncertainty.

The monthly CBI Distributive Trades Survey of 105 firms, 50 of which are retailers, found 28% of respondents had seen sales volumes rise in March, while 46% had seen them fall, giving a net balance of -18%.

That represents the fastest contraction for 17 months and makes March the fourth month in a row where sales have not grown.

The volume of orders placed on suppliers fell in the year to March, with a balance of -13% compared to +7% in the year to February. Year-on-year growth in internet sales volumes also slowed, to +21%, representing the weakest growth rate for a year.

The CBI conceded that year-on-year sales growth in March had been distorted by Easter falling later than it did in 2017, noting that sales for the time of year had improved, with a balance of +13% up from February’s +4%.

A majority of retailers also expected sales to pick up next month, giving it a net balance of +15%.

But Anna Leach, head of economic intelligence at the CBI, said: “Even accounting for Easter timing, the high street’s poor run continues. While real wage growth is picking up, consumer confidence has been hit by escalating uncertainty over Brexit and concerns over the economy’s future.

“The pain currently being felt on the high street is yet another reason why it is so vitally important politicians agree a deal that is acceptable to the EU and protects our economy. No-deal must be averted at all costs.”

Last week, the CBI took the rare step of joining forces with the Trades Union Congress to co-author a joint letter to the prime minister calling on government to avoid a no-deal departure.

Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said that the March survey – which closes mid-month – did not capture any potential boost to sales from Mother’s Day, which was on 11 March in 2018 but 31 March this year.

He continued: “As usual, we advise placing more weight on the sales-for-the-time-of-year balance, as it has a better – though still poor – relationship with the official data and is less susceptible to calendar-related volatility; it rose to a 10-month high.

“Accordingly, retail sales volumes still look on course to rise by about 1% quarter-on-quarter in the first quarter. Consumers will ensure that overall GDP remains on a slowly rising path, despite the Brexit hit to capex.”