CBI says high street sales still weakening

According to the CBI’s distributive trades survey, high street retailers have experienced one of the worst summers for years and the situation is not expected to improve in the short term.

Approximately 20% of retailers expect trade to worsen in the next quarter, compared with only 13% who expect an improvement. It is the first time in seven years that stores have been more negative than positive about the economic outlook.

Approximately 45% of retailers recorded lower sales volumes in August on the previous year, compared with 27% who reported an increase. Trade remained low despite large price reductions and extended summer sales.

The underlying annual sales trend, measured over three months, was at its weakest level in the survey’s 22-year history.

The Bank of England reduced interest rates to 4.5% in August, the first cut for two years, to stimulate consumer spending, but this not yet affected the High Street.

Several factors have had a negative impact on trading including a slowdown in the housing market which affected the DIY and furniture sectors. The European Union’s capping of textiles imports from China has also put pressure on retailers, who are unable to take delivery of new stock which is being held in warehouses.

The CBI’s director general, Sir Digby Jones, said: “It will be the unwitting customers who, as always when countries indulge in protectionism, end up having to pay more money”.