Retail sales fall after Easter 'blip'

Retail sales fell in the year to May as the previous month's slight gains proved an Easter "blip", the CBI said today.

According to the business group's Distributive Trades Survey, a balance of 17 per cent of firms reported sales were down.

This compared with a positive 3 per cent balance in April, boosted by late Easter.

Quarterly figures also released today indicated that retail prices rose at the slowest rate for nearly three years in the 12 months to May, with this quarter's balance of 12 per cent the lowest since August 2006.

Andy Clarke, chairman of the CBI Distributive Trades Panel, said: "Conditions were tough again in May for retailers, proving April's better sales figure was a temporary blip.

"Trading conditions are expected to remain difficult in June.

"The harsh reality is consumers need good reason to part with their hard-earned cash."

Retailers continued to cut jobs, with a 29 per cent balance reporting they had reduced their head count.

The CBI said while weak this was an improvement on the last quarterly figures in February, which showed a negative balance of 49 per cent.

Grocers and retailers selling footwear and leather goods both reported positive sales growth in May, although at a slower pace than the previous month.

The hardware, china and DIY sectors saw flat sales growth in May, while sales of big-ticket household items such as furniture and carpets continued to fall.

But despite a return to negative sales growth for the retail industry the CBI, asked about the general business situation, gave their least pessimistic response since November 2007.

Ian McCafferty, the CBI's chief economic adviser, said: "Retailers are less pessimistic about their general business situation, and the decline in demand now appears to be slowing compared with the turn of the year.

"However, with unemployment still rising, conditions will remain tough."

The CBI said sales for the time of year were reported to be poor by a net 36 per cent of retailers, though they have slightly less negative expectations for June.

Retailers appeared to be reducing their stock levels to adjust to lower demand and the balance of firms saying these were more than adequate to meet demand which was the lowest since June 2007.