UK retail sales deteriorated further in June, with volumes declining at a faster pace and falling short of seasonal expectations by the largest margin in more than two years, according to the latest CBI Distributive Trades Survey. The data underscores persistent weakness in consumer demand and mounting cost pressures across the retail and distribution sectors.
Retail Sales Decline Deepens
The CBI survey showed that retailers judged sales for the time of year as poor in June, with the weighted balance worsening to -40% from -35% in May—the weakest reading since January 2024. Year-on-year retail sales volumes also fell at a sharper rate, with the balance dropping to -54% from -46% in May.
Martin Sartorius, Lead Economist at the CBI, noted that retailers experienced a gloomy start to the summer, with sales disappointing relative to seasonal norms to the greatest extent in over two years amid depressed consumer sentiment and rising cost pressures.
Looking ahead, retailers expect conditions to remain subdued in July, though sales are projected to fall short of seasonal norms by a slightly smaller margin, with a balance of -35%.
Weakness Spreads Across Distribution Sector
The downturn was not confined to retail. Wholesale sales volumes remained under pressure, with the balance easing slightly to -20% in June from -26% in May. However, the decline is expected to accelerate again in July, with the balance forecast to worsen to -43%.
Total distribution sales volumes also stayed weak, declining at a broadly similar pace to May, with the balance at -33% compared with -35% a month earlier. The CBI expects total distribution sales to contract more quickly next month, with the balance seen at -41%.
Motor trades remained in negative territory, though the pace of decline slowed. Sales volumes in the sector fell at a weighted balance of -30% in the year to June, improving from -46% in May. The decline is expected to ease further in July, with the balance forecast at -24%.
Online Sales Offer a Bright Spot
One more positive sign came from online retail. Internet sales volumes were flat in the year to June, compared with growth of +11% in May. Retailers, however, expect a stronger performance next month, with online sales forecast to rise at a weighted balance of +37%.
The survey also showed that retail orders placed with suppliers continued to fall, though the pace of decline eased in June. Orders dropped to -26% from -39% in May. However, retailers expect orders to be cut back slightly more quickly in July, with the balance seen at -32%.
Retail stock volumes relative to expected sales softened slightly in June, with the balance at +19%, down from +24% in May, and remained broadly in line with the long-run average of +17%. Stock positions are expected to stay broadly stable in July, with a projected balance of +16%.
Broader Economic Context
The weak retail reading follows a downbeat set of business surveys from S&P Global, which, while not covering retail, are closely watched as early indicators of broader economic growth. A separate CBI survey released earlier this week showed British manufacturing orders deteriorated this month at the fastest rate since September 2020.
For investors, the data reinforces the challenging environment for UK discretionary retail exposure. As highlighted in our analysis, short positions on FTSE 350 retail names such as Next (NXT.L) and JD Sports (JD.L) may be warranted given the broad demand pressure and margin risks from promotions. Similarly, distribution and wholesale names like Bunzl (BNZL.L) and Ferguson (FERG.L) face headwinds from contracting volumes across the supply chain.
Meanwhile, retail investors are shifting from broad index bets to selective trades, reflecting the uneven market conditions. In the commodities space, gold has slipped below $4,110 as rising yields counter safe-haven demand, while bitcoin stalls near $62K amid oil surge and Fed caution.
CBI Calls for Policy Stability
Sartorius said the business environment remained fragile and called for greater policy clarity as the UK prepares for a change in leadership. The survey adds to signs of strain across parts of the UK economy, with consumer confidence and cost pressures likely to remain key themes in the months ahead.
This article is for informational purposes only and does not constitute financial advice.
