Retail confidence remains under heavy strain as August marked the eleventh consecutive month of falling sales, according to the latest CBI distributive trades survey. Sales volumes declined sharply year-over-year, although expectations for September suggest the downturn may be slowing. Still, retailers continue to grapple with weak demand, reduced hiring, and curtailed investment plans, while selling prices surged at their fastest rate since November 2023.

Total distribution sales, including wholesale and motor trades, contracted at a slower pace than in July, while motor trades saw a marked improvement compared to their steep July drop. Yet, retail orders to suppliers continued to collapse further, signalling retailers' cautious outlook. Employment losses are expected to worsen slightly, underscoring the pressure on the sector's workforce.

Online sales provided little relief, holding steady in August but forecast to contract significantly next month. Elevated stock levels in August hint at mismatched demand, with inventories likely to soften as sales remain below seasonal norms. In short, retailers are navigating a fragile environment: demand is weak, costs remain high, and confidence, though slightly less harmful, remains deeply subdued.

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.