UK retail sales volumes unexpectedly stabilize in July - CBI

The Confederation of British Industry (CBI) reported on Tuesday its latest survey of retailers showed retail sales volume balance stood at +4 in the year to July, up from -37 in June, which pointed to a stabilization in sales after three months of sharp declines. That was the highest survey balance since November 2019. The improvement was primarily driven by stronger grocery sales, although conditions appear to have eased more widely following the re-opening of non-essential retailers on July 4.

Economist had forecast the reading to increase to -25.

However, retail sales volumes are expected to fall slightly in the year to August (-5).

The report also revealed that orders placed on suppliers fell for the fourth consecutive month, though at a slower pace than in June (-14 compared to -47) and are expected to drop at a similar pace next month (-14).

Rain Newton-Smith, CBI Chief Economist, noted: “It’s great to see retail sales stabilize this month, but this doesn’t tell the whole story. This crisis has created winners and losers within the retail sector and for some businesses the picture remains bleak. The re-opening of non-essential retail was a vital step towards recovery but isn’t a cure-all. The Government has provided critical support for firms and jobs throughout the crisis. But ongoing financial pressures are a major challenge for some retailers, and additional direct support to shore up cash flow, such as extension of business rates relief, should be considered.”