LONDON — U.K. retail sales for the month of July fell at their fastest pace in four years due to consumers’ post-referendum prudence, according to the Confederation of British Industry’s latest survey.
According to the business lobby’s monthly Distributive Trades Survey, which measures sales activity, July volumes declined more rapidly than at any time since January 2012. It said weaker consumer confidence was a likely factor in the immediate aftermath of Britain’s vote to leave the European Union. CBI also said that companies expect sales volumes to decline at a broadly similar pace in August.
Sales by grocers, and furniture and carpets stores were the main drivers of the drop in overall volumes, while department stores and retailers of footwear and leather goods reported higher volumes.
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Department stores saw 52 percent sales volume growth in July compared with June, which witnessed a 45 percent drop in June; clothing saw a 20 percent rise compared with the previous month’s 23 percent, and footwear and leather grew 44 percent, versus 12 percent.
Rain Newton-Smith, CBI chief economist, said that while conditions in the retail sector have weakened, “we should be careful about reading too much too soon, as consumers were likely to err on the side of caution in the immediate period following a vote to leave the EU.”
Newton-Smith added that current low levels of inflation and high overall employment should support consumer spending in the near term, although the impact of lower sterling is likely to feed through to higher inflation over time.
“What businesses and consumers need now is calm and decisive leadership, a clear timetable and a plan for negotiating the U.K.’s future outside the EU to restore confidence,” she said.
The CBI survey was conducted between June 28 and July 14, with 132 firms taking part. Some 66 were retailers, 59 were wholesalers and seven were motor traders. CBI said it speaks on behalf of 190,000 businesses of all sizes and sectors. Its corporate members together employ nearly 7 million people, or about one-third of private-sector employees.
Separately, the U.K. Office for National Statistics said gross domestic product was estimated to have increased by 0.6 percent in second quarter from April to June, compared with a gain of 0.4 percent the first quarter of the year.
The office said Wednesday that GDP was 2.2 percent higher in the second quarter compared with the same quarter a year ago, indicating that the uncertainty around the EU referendum vote on June 23 had little bearing on economic growth.