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British retailers suffer from a drop in sales and foresee further weakness in consumption

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British retailers reported a year-on-year drop in sales in June and expect sales next month to be well below normal for the time of year as rising cost of living eroding buyers’ disposable income, a survey showed on Thursday.

The Confederation of British Industry (CBI) said the balance of retailers reporting below-normal sales, rather than above-normal, fell to -19 in June from zero. in May and is expected to decline further, to -25, in July.

The CBI sales balance for June, which compares sales volumes with those of the previous year, fell from -1 in May to -5.

“Retail sales volumes are struggling as high inflation eats away at consumer budgets. Lower household income appears to have offset the boost in activity brought about by the extended Jubilee holiday of Platinum earlier this month,” said Ben Jones, an economist at the CBI.

Lower demand from buyers is also causing retailers to reduce their orders from suppliers.

“Wholesalers are seeing a 14-month period of strong sales growth come to a halt this month,” Jones said.

Official figures on Wednesday showed consumer price inflation rose to 9.1% in May, its highest level in more than 40 years, and the Bank of England expects it to top 11% in October, when rates household energy bills increase by 40%.

The CBI survey was conducted between May 27 and June 14 and was based on responses from 100 companies, including 39 retail chains.

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