The July 2025 CBI distributive trades survey paints a challenging picture for the UK retail and distribution sectors, as sales volumes continued their downward trajectory for the tenth consecutive month. Although the pace of decline slowed marginally from June (minus 34 percent vs minus 46 percent), the outlook remains bleak, with expectations of similar contraction into August (minus 31 percent). Seasonal sales were deemed poor, and confidence appears shaken amid persistently high costs and subdued consumer demand.

Online retail offered a rare glimmer of hope, with modest growth (4 percent) marking a third consecutive month of expansion, though this remains modest. Meanwhile, wholesale (minus 32 percent) and motor trade (minus 77 percent) volumes recorded severe downturns, the latter suffering its worst performance since June 2020. Retail orders to suppliers and stock levels are also retreating, indicating cautious inventory management in light of weak demand.

Sustained inflationary pressures, especially rising labour costs, continue to erode household spending power, thereby contributing to the ongoing weakness in retail sales. To address these challenges and restore business confidence, the government needs to take targeted action in the forthcoming Autumn Budget. This includes easing regulatory and financial burdens faced by firms, providing clarity on policy implementation, and working collaboratively with the business sector. Without these short-term confidence-building measures, the retail and wider distributive sectors may remain mired in prolonged stagnation.

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.