british retail — British retail sales remain weak despite a slight improvement in May, according to figures released by the Confederation of British Industry (CBI). The CBI’s monthly retail sales balance rose to a three-month high of -46 in May, up from -68 in April, which had marked the lowest reading since the series began in 1983.
The retail sales balance gauges the difference between the percentages of firms reporting increases and decreases in sales volumes compared to the same month a year earlier. While the reading reflects a marginal improvement, it still indicates low consumer demand.
British retail: Future Sales Expectations Remain Pessimistic
Looking ahead, expected sales for June have shown a slight increase to -36 from the -60 anticipated for May. However, sales for this time of year have dropped to their lowest level since June 2025, recorded at -35, down from -32 in April. Retailers are grappling with a prolonged negative sentiment that has persisted for two years.
Concerns Over Household Budgets
CBI economic surveys manager Charlotte Dendy highlighted the ongoing challenges for businesses, stating, “With sentiment among retailers negative for two years now, businesses expect to cut back further on investment while continuing to reduce headcount.” These sentiments are echoed by the impact of rising energy prices due to the Iran war, which are predicted to squeeze household disposable income and raise operational costs.
Contrasting Data from Official Retail Reports
Last week, separate official retail sales data for April, which encompasses a broader range of stores than the CBI measure, indicated that sales volumes excluding fuel were 1.1 per cent higher than a year earlier and remained unchanged from the previous month.
Consumer Sentiment Remains Low
Britain’s longest-running consumer sentiment survey, conducted by GfK, fell to its lowest level since October 2023 in April, with only a slight increase observed in May. This suggests that consumers are still cautious about spending, impacting overall retail performance.
Price Adjustments in Response to Demand
The CBI noted that retailers raised prices this month by the least amount since February 2025, attributing this to weak demand. The Bank of England is closely monitoring the situation, particularly regarding how businesses adjust their pricing and profit margins, as it considers whether to raise interest rates later this year to mitigate inflation caused by external pressures.
Kingfisher’s Mixed Performance
Adding to the mixed retail landscape, European home improvements retailer Kingfisher reported a 0.7 per cent decline in first-quarter sales but has maintained its full-year profit guidance. This reflects the ongoing volatility in consumer spending and retail performance across various sectors.
