Amid concerns that Brexit and rising prices due to the fall in the value of the pound, are starting to slow spending by consumers, data released by the CBI yesterday suggests the sector is still holding up relatively well.
Its latest monthly Distributive Trades Survey showed that retail sales volumes grew at a steady pace in the year to March, and slightly faster than expected.
The survey of 116 firms, consisting of 65 retailers, showed that growth in the volumes of sales was similar to that seen in February, but is set to accelerate in the year to April. 44% of retailers said that sales volumes were up in March on a year ago, whilst 35% said they were down, giving a balance of +9%.
The CBI said that moderate increase in headline retail sales volumes was driven by the grocery and clothing sectors. Year-on-year growth in internet sales volumes picked up to broadly in line with the long-run average. Internet sales volumes are expected to grow at broadly similar pace in the year to April.
Meanwhile, sales for the time of year were considered to be slightly below seasonal norms with 24% of retailers saying the volume of sales were good for the time of year, with 31% saying they were poor, giving a balance of -6% – the lowest survey balance since July 2016.
Orders placed on suppliers fell again over the year, but look set to rise somewhat next month. 30% of retailers placed more orders with suppliers than they did a year ago, and 40% placed fewer, giving a balance of -10%. Meanwhile, 33% of retailers expect the volume of orders placed on suppliers to increase in the year to April, with 28% expecting them to decrease, giving a balance of +5%
Anna Leach, CBI Head of Economic Intelligence, said: “It’s encouraging to see that sales volumes growth is holding up and expectations have strengthened.
“However, retailers continue to be squeezed by rising cost pressures on the one hand, and intense competition on the other, which will limit their ability to raise prices. With household spending growth set to slow as inflation rises, retailers seem likely to remain under pressure through this year.”