A downturn in British retail sales extended into its 10th month in July as rising prices weighed on consumers, although the pace of the fall was less severe than in June, a Confederation of British Industry survey showed on Monday.

The CBI’s monthly gauge of how retail sales compared with a year earlier stood at -34 this month, an improvement on June’s -46 but still a sign of weakness in demand.

A measure of expected sales for August rose to -31 from -49, the CBI said.

“Firms reported that elevated price pressures – driven by rising labour costs – and economic uncertainty continue to weigh on household demand, which has contributed to sales volumes falling since October 2024,” Martin Sartorius, principal economist at the CBI said.

Employers groups have said finance minister Rachel Reeves’ decision to increase the social securitycontributions they pay for their staff, as well as an increase in the minimum wage, is contributing to higher prices.

Weak demand was mirrored across the distribution sector, with wholesale and motor trades also seeing declining sales, Sartorius said.

Official data published last week showed British consumers shopped more in June after May’s big fall with hot weather helping to increase sales of drinks, clothes and car fuel.

However, in the three months to June, sales volumes rose by 0.2%, the weakest increase since the three months to February.

Many households are feeling the squeeze again from an inflation rate that rose to 3.6% in June.
While the CBI’s overall sales gauge remained in negative territory, online sales volume rose for a third month in a row, albeit marginally.

The data was collected between June 27 and July 15 and was based on responses from 56 retailers and 91 wholesalers.