The CBI's new survey found a significant acceleration in the pace at which sales fell this month. The headline balance weighed in at minus 32 percent, more than 20 percentage points below the November reading and even further short of the market consensus. This was only a 2-month low and some 12 percentage points stronger than the 2023 trough seen in August but the eighth straight sub-zero print. In fact, with actual sales declining a hefty 1.7 percent on the month a year ago, the implications for year-end demand are particularly poor. Moreover, the CBI's own forecast for January is even weaker at minus 41 percent.

Sales for the time of year, the best underlying guide, dropped from minus 16 percent to minus 25 percent and are seen sliding further to minus 37 percent next month. Similarly, orders placed with suppliers (minus 54 percent after minus 22 percent) declined sharply too. Not helping matters, stock volumes relative to sales (10 percent after 13 percent) were still thought to be too high.

The surprisingly soft December report reduces the UK's RPI to minus 38 and the RPI-P to minus 40. Both values show economic activity in general lagging well behind market expectations which can only bolster speculation about interest rate cuts in 2024.

The headline sales balance is expected to improve marginally to minus 9 percent from minus 11 percent in November.

The Confederation of British Industry (CBI) produces a monthly survey (and a more detailed quarterly report) analysing the performance of the UK retail, wholesale and motor trade sector. Volume sales, orders on suppliers, sales for the time of year and stocks are all covered and the quarterly survey also covers imports, selling prices, numbers employed, investment and business situation. Financial markets tend to concentrate on the CBI's annual sales growth measure as a leading indicator of the official retail sales report.

This survey is a leading indicator of consumer spending because retailer and wholesaler sales are directly influenced by consumer buying levels. The monthly update provides a vital update on volume of sales, orders and stocks. Like the industrial survey, it carries significant weight in the formulation of economic policy at the Bank of England and within government as a highly respected barometer of high street trade. It is considered to be an advance indicator of retail sales although it is not well correlated with the official data on a monthly basis.