U.K. Retail-Sales Index Falls to Lowest in 13 Months, CBI Says

A U.K. retail-sales index fell to its lowest level in 13 months in July as Britons curtailed spending on groceries and home improvement, according to a Confederation of British Industry survey.

The gauge slipped to minus 5 from minus 2 in June, the London-based business lobby said in a report today. That’s the lowest since June 2010 and stores expect the drop in sales to accelerate “slightly” in August, the CBI said.

The U.K. economy barely grew in the second quarter, data this week showed, and consumer confidence fell in June as Britons grew more pessimistic about the outlook for spending,Nationwide Building Society said. Households are seeing their spending power eroded at the fastest pace since the 1970s as inflation outpaces wage growth and the government implements budget cuts to reduce the deficit.

“Rising prices, especially for fuel, continue to impact consumer confidence and make life tough on the high street,”Judith McKenna, chief operating officer of Wal-Mart Stores Inc. (WMT)’s Asda unit and chair of the CBI’s distributive trades panel, said in a statement. “With consumer confidence fragile, U.K. retailers continue to face challenging times.”

The decline in July was led by grocers, home-improvement retailers and specialist food and drink stores. Demand at grocery stores fell to the lowest level since December 2008, the CBI said. Sales growth at clothing stores was “modest,” while demand for durable household goods fell “rapidly.”

The CBI said that sales were “well below average for the time of year, and well below expectations.” The report was based on a survey of 71 retailers between June 28 and July 19.

Marks & Spencer Group Plc (MKS), the U.K.’s largest clothing retailer, said on July 13 that sales growth at British stores open at least a year missed some estimates because of stagnant general-merchandise revenue. “The coming quarter and coming half-year will be a very challenging one,” Chief Executive Officer Marc Bolland said.

Demand on suppliers decreased in July, the CBI said, with a gauge of orders dropping 8 points to minus 13, the lowest reading since May 2010. An index of the volume of stocks in relation to expected demand rose 1 point from a seven-month low to 17, while the measure of sales for the time of year plunged to minus 33 from minus 19.


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