Year-on-year retail sales volumes fell at a faster pace in January, extending the sector’s downturn into a fourth consecutive month. That’s according to the latest CBI Distributive Trades Survey.

Retailers expect annual sales to fall again in February, at a broadly similar rate.

Key findings included:

• Year-on-year retail sales volumes fell at a faster pace in January (weighted balance of -24% from -15% in December). Sales are expected to decline at a broadly similar rate next month (-26%).

  
  

• Retail sales volumes were judged to be ‘poor’ for the time of year in January, to a similar extent as seen over the previous three months (-24% from -23% in December). Sales are expected to fall short of seasonal norms to a greater degree in February (-31%).

  
  

• Internet retail sales volumes declined at a quicker pace in the year to January (-22% from -8% in December) and are expected to fall sharply next month (-46%).

  
  

• Total distribution annual sales volumes (includes retail, wholesale, and motor trades) in January fell at the fastest rate in a year (-32% from -30% in December). Firms expect sales to contract at the same rate next month (-32%).

  
  

Martin Sartorius, Principal Economist, CBI, said:

“The retail sector saw a further deepening of the recent sales downturn in January. Retailers cited weak demand and downbeat sentiment as continuing strains on business conditions."

“The combination of a faster fall in retail sales volumes and firm declines in wholesale and motor trades resulted in the total distribution sector seeing the sharpest annual sales drop in a year. Looking ahead, retailers, wholesalers, and motor traders expect the sales slump to continue into next month."

“With recent growth figures showing the urgent need to inject momentum into the economy, the government should look at policy levers that would help shore up confidence across key sectors, including retail. As firms brace for an April costs hike due Budget measures coming into force, it is crucial to press ahead with reforms to the unfair business rates system and deliver much-needed flexibility to the Apprenticeship Levy.”

In addition, data from the survey showed:

• Orders placed upon suppliers declined at an accelerated rate in the year to January (-43% from -26% in December). Retailers anticipate cutting back on orders at a more moderate pace in February (-25%).

  
  

• Retail stock volumes remained elevated relative to expected demand in January (+26% from +13%; long-run average +17%). Stock positions are set to soften next month (+18%).

  
  

• Wholesale annual sales volumes contracted in January at a similarly quick pace to last month (-30% from -32% in December). The sales downturn is set to keep a steady rate in February (-28%).

  
  

• Motor trades sales volumes fell at a rapid pace in the year to January (-59% from -58% in December). Sales are set to decline at a broadly similar rate next month (-62%).