Retail sales declined sharply in the year to October, disappointing expectations for a solid expansion, according to the latest monthly CBI Distributive Trades Survey, however the hardware and DIY sector saw a 43% increase in sales, performing well amongst a rapid decline in other sectors.
The survey of 106 firms, of which 49 were retailers showed that retail sales fell at the quickest rate since March 2009 – the height of the financial crisis. Overall, sales for the time of year were considered to be slightly below seasonal norms. Meanwhile, orders placed on suppliers also dropped at the fastest rate since March 2009.
15% of retailers said that sales volumes were up in October on a year ago, whilst 50% said they were down, giving a rounded balance of -36%. This significantly undershot expectations (+23%).
Looking ahead to the next month, retailers expect sales volumes to stabilise in the year to November, but orders are expected to see a further decline, albeit at a slower pace.
Growth in online sales slowed in the year to October, to a pace just below the long-run average, but is expected to pick up slightly in the year to November.
Meanwhile, wholesalers continued to report above average growth in sales volumes in the year to October, with a similarly strong increase expected in the year to November. However, motor traders saw a sharp decline in sales volumes, and expect a further fall 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.
Sales volumes expanded in other normal goods (74%), and recreational goods (+64%)