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August looks set to be a bleak month for consumer spending, says the Confederation of British Industry (CBI). This follows a sharp fall in sales volumes throughout July.

In its latest Distributive Trades Survey, 61 per cent of respondents reported that sales in the first half of July were lower than a year ago, with only 25 per cent reporting an increase. The resulting balance of -36 per cent was the weakest since the survey began in 1983. A similar fall in sales volumes of 32 per cent is expected in August.

Andy Clarke, chairman of the CBI distributive trades panel and retail director of Asda, says: ‘It is turning out to be a very grim summer for many retailers. Pressure from higher fuel and food prices is prompting many people to rein in their spending. The retail sector will have to focus more than ever on providing good value to customers if they want to keep the sun shining this summer.’

Examining the individual sectors, demand for big-ticket items was especially weak, with every respondent selling durable household goods, furniture and carpets reporting that sales were down on a year ago. Clothing retailers also endured another poor month, according to the CBI. However, grocers, including supermarkets, and footwear and leather retailers were the only sectors to report year-on-year sales growth.