Lack of confidence rains on summer retail parade

By SCOTT REID
Published on 31/07/2012 00:00

FURTHER gloom descended on the high street yesterday after the CBI reported weaker-than-expected growth in recent weeks, denting hopes of a wider economic recovery.

Releasing its regular distributive trades survey, the business group said the “unprecedented” poor weather and weak consumer confidence had weighed on stores’ takings.

The poll – conducted between 26 June and 17 July – revealed that a balance of +11 per cent of retailers had seen sales volumes rise compared with a year earlier. That compares with June’s 18-month high of +42 per cent and analysts’ forecasts for a reading of +15 per cent.

Judith McKenna, chair of the CBI distributive trades panel and Asda’s chief operating officer, said: “The unprecedented poor weather for the time of year did not help, but retailers also expect conditions to remain tough during August.

“With consumer confidence weak and wage growth remaining sluggish, the longer-term outlook for retailers remains challenging.”

The latest findings are more in tune with other recent retail surveys after June’s strong balance took economists by surprise.

Retailers have been struggling as consumers tighten their belts due to high inflation, muted wage growth, worries about unemployment and government austerity cuts.

Howard Archer, chief UK economist at forecasting group IHS Global Insight, said: “The July CBI survey was appreciably softer than hoped for, which puts an early dent into hopes that the economy can achieve a decent bounce-back in the third quarter.”