Consumer confidence questioned as sales growth subsides

Retail sales growth has subsided and significantly undershot expectations across the high street in June, according to data published by the Confederation of British Industry.

The trade lobby group says a net balance of 29 per cent of its retail survey respondents reported that sales volumes were up on last June – much less than the forecast figure of 58 per cent and the 51 per cent who reported growth in May. The slowdown was caused by sluggish grocery sales, which were flat over the 12 months to June.

According to analysts quoted in The Guardian, the figures would still equate to "healthy" retail sales growth of about 0.9 per cent in the second quarter of the year, which will help accelerate economic expansion. Howard Archer, chief UK and European economist at IHS Global Insight, is predicting the economy will grow by 0.7 per cent in the second quarter, up from 0.3 per cent for the first three months.

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The disappointing June retail figures come on the day department store Debenhams revealed flat UK sales for the 15 weeks to June, which prompted its chief executive to warn of consumer caution amid a fresh bout of austerity. Quoted by Reuters Michael Sharp said despite the benefits of falling prices on household finances, customers were picking up the message "things are going to remain tough for a while". "That manifests itself as proceed with caution," he added.

Debenham's like-for-like sales edged up by 0.9 per cent in the 41 weeks to June, the Daily Telegraph notes, and Sharp said he remained confident it would hit its full-year forecasts. He attributed the recent slowdown in part to bringing forward summer promotions to the first half of the year and pointed to another surge in online sales, which were up by close to 17 per cent.

The CBI predicted sales growth would pick up again in July, with a net balance of 33 per cent expecting orders to increase.