CBI recommends interest rate cut
According to the CBI, sales in the retail sector continued to fall in July and forty-seven per cent of retailers said their volume of sales were down compared with 29 per cent who said they were up, a negative balance of minus 18 per cent.
Retailers have not seen an increase in annual sales since the end of 2004 which is probably a reflection of the continuing anxiety over the housing market, interest rates and tax increases. The underlying sales trend was down to minus 15 per cent, the lowest figure recorded in the survey’s 22 year history.
Although most retailers regard sales as ‘poor’ for the time of year and have accelerated their ‘summer sale offers’ there has been a slight improvement on the June figures in some areas. For example, strong growth continues in the grocery sector, though not at the pace recorded last year. Meanwhile, the furniture and carpet sector has continued its rapid fall with clothing, confectionery, tobacco and news all falling at a substantially faster rate than in June.
Orders in July continued to fall at the fastest rate since July 1999 and are expected to fall again in August.
Commenting on the latest data CBI Director General, Sir Digby Jones said:
“With the exception of grocery, the deterioration in retail sales volumes is continuing. When considered alongside the weakness of order books in the manufacturing sector and the depressed state of the housing market, a marked slow down in the economy is clear to see, as the ONS* has acknowledged.
“As the risk of inflation remains low, a timely cut in interest rates by the Monetary Policy Committee on Thursday is essential to maintain growth and consumer confidence.
“The argument for a ‘wait and see’ approach is fading fast. It is time for the Bank of England to get off the fence”
The terrorist attacks in London on 7 July occured during the period of this survey and CBI preliminary analysis shows that, although based on a smaller sample than the DTS survey, the position of retailers appears to have been largely unaffected. The impact of the second, failed attack will only be evident in the August survey.
It should also be noted that the retailing picture for July contrasted with that of UK wholesalers who reported more positive news, with a significant increase in sales volumes over the year to July, though this growth did fall below their expectations.
