British retail sales slowed in the run-up to the EU referendum, an industry survey has shown.
A balance of UK retailers saying sales rose minus those who reported falling sales fell to 4% in June, down from 7% in May, according to the Confederation of British Industry’s latest snapshot of the retail sector (pdf). The survey was conducted between 26 May and 14 June – before the UK’s shock vote to leave the EU.
Grocers, furniture and carpet shops, along with hardware and DIY stores, reported a pickup in sales in the year to June. But growth slowed at clothing retailers and sales fell at department stores, specialist food and drink retailers, and shops selling durable household goods such as cookers and washing machines.
Retailers were expecting sales to improve in July, with the balance improving to -10% from -5% in June, while orders were expected to continue falling.
The CBI said: “Retail sales reported weak growth in the year to June, beating expectations of a modest fall and lifting sales slightly above average for the time of year.”
Orders placed on suppliers fell in June, albeit at a slower pace than in the previous month.
Growth in the volume of internet sales slowed in the year to June, with the survey balance falling below the long-run average. However, internet sales growth was expected to pick up strongly in July.
Howard Archer, chief European and UK economist at IHS Global Insight, said the survey suggested “consumers were relatively cautious in their spending in the run-up to the EU referendum, but did not completely keep their hands in their pockets”.
He continued: “There is not much evidence in the survey of retail sales getting a significant boost from the European football championships, although this only started on 10 June, while the CBI survey only ran until 14 June.
“A massive question now is how well or badly will retail sales perform in July following the UK’s vote to leave the EU?
“Following the vote to leave the EU, the strong suspicion is that consumer spending will be severely pressurised for some time as a consequence of increased uncertainty, likely higher unemployment and squeezed purchased power. It is probable purchasing power will be squeezed by inflation being pushed up markedly by a sharp fall in sterling.”
A separate report from Lloyds bank showed that consumer spending on essentials fell again last month, although the pace of decline was the slowest since March 2015. People spent 0.4% less on essentials year-on-year in May, the 18th consecutive month of decline.
Food and drink accounts for 40% of all essential spending. This turned positive, at 0.1%, following a 0.7% drop in April. Spending on fuel continued to fall, by 4.4% in May.
