High street gloom continues in wet August

28-08-2008

High street gloom continues in wet August
UK high street gloom continued in August with disappointing summer sales and poor weather hitting stores.

Data from the CBI show a second month of sharp falls in sales volumes and low business confidence points to a similarly weak September.

Prices are also rising on the high street – but they eased back from the 16-year high posted in July. A balance of 48 per cent of stores reported price rises well above the long-run average.

CBI Distributive Trades Survey reveals 60 per cent of firms reported sales in the first half of August lower than a year ago, while just 13 per cent saw them rise.

Confidence for the coming three months is also low, with a balance of 38 per cent of firms expecting conditions on the high street to deteriorate.

The only sector to see growth was grocers, while stores particularly connected to the housing market faced "very difficult conditions".

"This has been a summer that many retailers would rather forget. The downturn in the housing market is continuing to depress sales for those shops selling big-ticket items," said Andy Clarke, CBI Distributive Trades Panel chairman and Asda retail director.

"This month's report also highlights that as disposable incomes tighten, food retailers fare better than the rest of the market.

"Shoppers will continue to be forced to look around for the best value on offer for all their purchases - not just their groceries."

Ian McCafferty, CBI Chief Economic Adviser, added: "Sadly, no let up is expected as we head into early autumn. The business outlook is particularly weak and retailers are having to scale back their employment and investment plans in an attempt to ride out the storm."

Vicky Redwood, UK economist at Capital Economics, explained the CBI survey was "pretty grim reading".

"The survey’s been going since the early 1980s, suggesting that conditions on the high street are even worse than in the previous recession."

She added: "At least there was reassuring news from an inflation point of view, with drops in both the reported and expected selling prices balances. But even a near-term cut in interest rates won’t bail out the economy over the next few months.

"Indeed, we now expect both consumer spending and overall GDP to fall next year."


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