U.K. Retail Trading Remains Tough, Says CBI

However, the month's decline in sales was in line with retailers' expectations and, other than in April, was the least negative result in nearly a year.

At the same time, retailers' sentiment about general business prospects was the least negative for over a year.

The survey reports that 31 percent of retailers said year-on-year sales volumes were up in the first half of May, while 48 percent said they were down.

The resulting balance of -17 percent was close to retailers' expectations of -15 percent and, other than last month's broadly flat figure of +3 percent, was the least negative figure since June 2008. Retailers surveyed expect a similar decline in sales in June.

The survey's three-month moving average of sales volumes, which smoothes out monthly peaks and troughs, remained weak, with a balance of -19 percent, but was

Grocers and footwear and leather retailers reported improved sales in May, although sales grew for both at a slower pace than in April. The hardware, china and DIY sector saw flat sales growth in May, while sales of big-ticket household items, such as durable goods and furniture and carpets, continued to fall.

"Conditions were tough again in May for retailers, proving April's better sales figure was a temporary blip," says Andy Clarke, chairman of the CBI Distributive Trades Panel and chief operating officer of Asda. "Trading conditions are expected to remain difficult in June. As for much of this year, supermarkets and shoe shops were the ones seeing decent growth. Sectors more dependent on people's house moves, such as furniture and carpets and durable household goods continued to see falling sales.

"The harsh reality is consumers need good reason to part with their hard-earned cash. Demonstrating that offering value for money as a retailer has never been more important, and marks out the true survivors."