High street sales fall to 22 year low
June 29, 2005
According to the CBI’s monthly distributive trades survey, in June, year-on-year UK retail sales fell by the largest amount for 22 year.
Approximately 23% of retailers recorded a year-on-year increase in sales, but 42% recorded a decline, giving a balance figure of -19, compared with May’s figure of -7 and April’s figure of -14.
The CBI attributed the fall to a series of five Bank of England interest rate increases since November 2004, which have caused consumers to reduce their spending. It said that sales appeared weak when contrasted with strong sales in June 2004 – a month when retailers benefited from increased spending related to the Euro 2004 international football championships.
John Longworth, chair of the CBI’s distributive trades panel, said that although this partly explained the result, the underlying situation was also serious as shoppers had reduced spending since the beginning of 2005. The situation was made worse by the slowdown in the housing market and an increase in energy bills.
Retailers of furniture and carpets, hardware, china and DIY products were severely affected by the slow housing market. Footwear and leather sales also fell sharply, and clothing sales remained weak.
Grocery sales, however, continued to show strong growth, with specialist food stores the only other sector to report an increase in sales.