27 June 2007, 19:21 PM
  • Retail sales have grown more slowly than expected for a second month running and at a rate significantly below April's three-year high, the CBI revealed.

The business group’s latest distributive trades’ survey, covering the first half of June, showed that for 37 per cent of retailers year-on-year sales were up, while for 20 per cent they were down. This balance of +17 is in line with the long-term average, but is the lowest since November last year.

Sales volumes were still considered above average for the time of year, and the three-monthly average, which smooths out monthly peaks and troughs, remained high at +31 per cent.

Retailers expect sales in July to grow at a similar rate to this month, and although growth in the volume of orders placed with suppliers has slowed a little, it remains above average. 

John Longworth, chairman of the CBI’s Distributive Trades Panel and executive director at Asda, says, “This survey shows consumers are reining in their spending in response to higher borrowing costs.

“A slower housing market is making its impact felt, in particular on sales of consumer durables and more expensive household items. But shoppers are also curbing their spending on everyday things such as groceries and a month of mixed weather did not inspire people to buy new summer clothes.”

Wholesalers reported slightly faster growth in annual sales volumes than they did in May, but June’s balance of +23 per cent was still slower than expected (+32%) and expectations for July (+16%) are the weakest since August last year.