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Retail sales fall sharpest since 2009: CBI


Retail sales fell this month at their steepest rate since the recession, according to new figures that add to anxiety over the strength of the economy days ahead of an expected interest rate hike.

The poll from the CBI reported a reading of -36 for the year to October, down from a two-year high of +42 in September and its lowest level since March 2009.
That helped send the pound more than a cent lower against the US dollar.
The retail data adds to fears over the resilience of consumer demand at a time when household finances are being squeezed, with wage growth failing to keep pace with inflation, which is at a five-year high.
Some experts warn that a widely expected increase in the Bank of England’s base rate next week from 0.25% to 0.5% risks weakening the UK’s already fragile economic outlook – also complicated by Brexit uncertainty.
Policy makers are still widely expected to act, though, especially after official growth figures for the third quarter this week showed a slight improvement in the pace of expansion to 0.4%.

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The monthly CBI figure – which can be volatile – came in well below City forecasts. A less volatile three-month reading was the lowest for more than a year.
The CBI’s distributive trades survey of 106 firms, including 49 retailers, showed recreational goods and hardware and DIY performing well, while department stores and food and drinks specialists saw sales fall.

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It also suggested firms expected sales to stabilise in the year to November.

CBI chief economist Rain Newton-Smith said: “It’s clear retailers are beginning to really feel the pinch from higher inflation.
“While retail sales can be volatile from month to month, the steep drop in sales in October echoes other recent data pointing to a marked softening in consumer demand.”
She added that it was a critical time for a sector employing three million people across the country and the Government could provide some relief by trimming an expected rise in business rates.

Image: Department store Debenhams reported flat UK sales for the year
Next April’s business rates hike would normally be linked to September’s RPI measure of inflation – which was recorded at 3.9%.
The CBI suggested the Government could bring forward a plan to switch this to the CPI inflation rate – which was 3%.
Howard Archer, chief economic advisor to the EY ITEM Club, said the latest figures suggested consumers were being “extremely cautious” at the start of the fourth quarter.
“Retailers will be hoping that this is mainly a consequence of consumers taking a breather before the crucial Christmas shopping period gets under way.”
The CBI poll came after department store Debenhams reported flat UK sales for the year and a sharp fall in profits as it invests in its performance amid a tough trading environment.

Source: Sky

About Business Ideas UK

My name is Joel Bissitt. I have been an entrepreneur for 24 years and have run many small businesses across various sectors. For the last 10 years I have worked mainly within online media, franchising and small business start-ups.

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