The latest CBI distributive trades survey for December revealed a continued downturn in retail sales volumes, marking the third consecutive month of annual declines. The weighted balance for retail sales volumes fell to minus 15 percent, some 5 percentage points below the consensus but slightly improving from November's minus 18 percent. Retailers remain cautious, expecting further contraction in January (minus 11 percent).

Sales volumes were deemed"poor" for the season (minus 23 percent), reflecting a consistent strain on consumer demand. Expectations for January suggest a continued below-seasonal performance, albeit with a minor improvement (minus 18 percent). Internet sales showed a modest decline (minus 8 percent) compared to November (minus 12 percent), but retailers anticipate a slight rebound in January (6 percent), signalling potential optimism in the e-commerce space. Distribution sales volumes, encompassing retail, wholesale, and motor trades, experienced a sharp contraction (minus 30 percent), a steep drop from the prior month (minus 17 percent). January is forecast to see a similar challenging environment, with expectations of a further decline (minus 33 percent).

The data suggests cautious optimism for online retail but highlights broader pressures on in-store and distribution sales, likely driven by weak consumer confidence and seasonal fluctuations. The latest update put the UK RPI and RPI-P at 12 and 14, respectively, meaning that economic activity in general is running slightly hotter than expected.

The headline sale index is seen rising from November's minus 18 percent to minus 10 percent.

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.