04/05/2005

CBI reports retail sales drop

The volume of retail sales has fallen in the year to April, according to the CBI’s monthly Distributive Trades Survey.

The survey found that nearly half of retailers (46%) reported a drop in sales volume, compared to 32% who reported a rise in sales; a balance of -14%, compared with a figure of -9% in last month’s survey. The CBI said that this was the most significant year-on-year fall since July 1992 and came in spite of retailers’ expectations last month that sales would stabilise.

The CBI said that trading was poor in most sectors, with chemists, furniture and carpet retailers being the most badly affected. Clothing sales also fell for the first time since March 2004. However, the CBI said that household goods had a “strong showing”, probably due to the popularity of products such as I-Pods and DVDs. Booksellers and stationers and grocers were the only others of the eleven sectors to show sales growth.

Wholesalers had a “more positive outlook”, the CBI survey reported, with sales volumes stabilising over the year to April, contrasting with last month’s results, which were reported as “very weak”. However, sales still remained below average for the time of year.

Sales also continued to fall for motor traders, the CBI survey found, the eleventh successive month in which sales of new vehicles fell year-on-year. Sales of parts and accessories remained unchanged over the same period. CBI Chief Economic Advisor Ian McCafferty said that the figures were a reminder of the “highly competitive sales market which contributed in part to MG Rover’s collapse”.

Mr McCafferty said: “Tough trading conditions are continuing for most retailers, despite expectations last month that the position would stabilise. This ongoing decline in sales is likely to reflect the recent fall in real disposable incomes, higher fuel and utility bills, reduced activity in the housing market and higher mortgage rates than a year ago.”

Mr McCafferty added: “These results add further weight to the argument against a premature rise in interest rates.”

(KMcA/SP)

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