The amount of goods retailers sold in the year to June fell at its fastest pace in 10 years, according to CBI analysis.
The CBI surveyed 88 firms, including 45 retailers, and found that sales for the time of year were below average, stalling online and falling in-store.
The figures suggest that UK economic growth slowed in the second quarter of the year, as the boost from stockpiling ahead of the expected March 29 Brexit date faded.
Alpesh Paleja, CBI principal economist, said: “This month’s drop in sales should be taken with a pinch of salt, given the backdrop of last June’s heatwave and the start of the World Cup. But even accounting for both factors, underlying conditions on the high street remain challenging. Retailers are having to continually compete for the attention of value-conscious shoppers in the age of digital disruption.
“The new Prime Minister must help support retailers by reducing the high cumulative burden of costs they face. This should start by urgently reviewing the dire businesss rates system, which is unfairly impacting UK high streets and deterring much-needed investment.”
The figures from the CBI survey showed 16% of retailers said that sales volumes were up in June, compared to a year ago, while 58% said they were down - giving a weighted balance of -42%. A balance of -11% expected sales volumes to increase next month. Some 15% of retailers placed more orders with suppliers than they did a year ago, while 48% placed fewer orders - a balance of -33%.
Online sales were broadly flat on a year earlier (+3%), following growth in the previous month (+38%). Internet sales growth is expected to pick up in the year to July (+23%) but remains weaker than the long-run average (+46%).
Wholesalers (+9 balance) said that sales volumes were up on last year, but overall expected them to be down slightly next month (-4%). Orders placed with suppliers fell (-10%). Car sales were also down (-41%) but were expected to be flat (-3%) next month.
Commenting on the figures, Catherine Shuttleworth, chief executive of shopper marketing agency Savvy, said: "The announcement from the CBI this lunchtime - that retail sales have plummeted - will be no surprise to many shoppers who have pulled in their belts. The continued fall in consumer confidence is impacting retailers outside of critical categories like food and drink. Last year’s sunshine and feel good factor as England enjoyed a strong World Cup run – plus a more positive attitude towards some kind thoughts of hope that a Brexit deal would be completed – meant that we were spending more. In marked contrast, this summer’s gloomy weather, gloomy attitude towards Brexit and general malaise is certainly slowing our spending right up.”