UK retail sales slide for 10th month amid cost pressures: CBI

Sales were again judged to be below seasonal norms, though less so than in June (-10 per cent vs -37 per cent). However, August expectations show a steeper seasonal shortfall (-36 per cent). Online retail offered a modest bright spot, expanding for the third month in a row at +4 per cent, with similar growth forecast for August, as per CBI Distributive Trades Survey – July 2025.

Wholesale trade volumes declined at -32 per cent, broadly unchanged from June, and are projected to fall at a similar rate in August. The motor trade sector experienced the steepest fall since June 2020, with sales plunging by -77 per cent in July. Although a slight recovery is expected, another sharp drop of -57 per cent is anticipated in August.

Total distribution sales volumes, which include retail, wholesale, and motor trades, fell by -39 per cent in July, matching June’s rate, and are forecast to contract slightly less at -34 per cent next month.

“Retail annual sales volumes continued to fall in July, although the pace of decline moderated from June’s sharp drop. Firms reported that elevated price pressures—driven by rising labour costs—and economic uncertainty continue to weigh on household demand, which has contributed to sales volumes falling since October 2024,” said Martin Sartorius, principal economist at CBI. “These trends of weak demand and uncertainty were mirrored across the wider distribution sector, with wholesale and motor trades also seeing declining sales.”

He urged the government to take immediate steps to restore short-term business confidence by delivering a clear and supportive Autumn Budget, tackling regulatory burdens, and providing clarity on employment rights bill.

Retailers also reported that supplier orders declined at a more moderate rate (-21 per cent from -51 per cent in June), with a further easing expected in August (-16 per cent). Stock levels in relation to expected demand fell below the long-run average at +12 per cent, with a similarly subdued outlook for next month (+10 per cent), added the survey.

ALCHEMPro News Desk (SG)