The latest CBI distributive trades survey showed that sales volumes declined for the fifth consecutive month in February, and a sharper downturn is expected in March. This persistent slump underscores weak consumer confidence and ongoing economic headwinds.

Retailers' concerns extend beyond immediate sales performance, with business sentiment remaining negative and investment intentions falling to their lowest level since May 2019 (minus 56 percent). The planned reduction in capital expenditure signals long-term caution, reflecting retailers' struggle to justify expansion in a volatile market. Moreover, headcount continues to shrink, albeit slower than before (minus 13 percent in February, minus 15 percent projected for March), indicating a cautious approach to cost management.

Online retail has not been spared, with digital sales falling sharply (minus 28 percent), defying expectations of e-commerce resilience. Meanwhile, wholesale and motor trade volumes show mixed trends, with wholesalers anticipating a slower decline but motor traders still grappling with significant losses.

A rare silver lining is that retail price inflation remains below historical averages, potentially providing some relief to consumers. However, with stock levels stabilising and supplier orders declining further, retailers are bracing for continued headwinds. The latest update leaves the UK RPI at 39 and the RPI-P at 29, meaning that economic activities are generally ahead of the consensus of the UK economy.

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.