UK retailers cautious as May sales improve, demand weak

Retailers told the Confederation of British Industry their sales balance improved to -46 in May from -68 in April, according to the CBI’s monthly survey published Tuesday. The reading marks a partial recovery from April’s record low but remains deeply negative.

The CBI balance measures the gap between the share of firms reporting higher sales volumes and those reporting declines compared with the same month a year earlier. April’s -68 was the lowest reading since the survey began in 1983.

Retailers’ expected sales for June improved to -36 from a previously forecast -60. Seasonal sales for the time of year slipped to -35 from -32, the weakest seasonal assessment since June 2025.

Respondents reported weak consumer demand and signaled plans to reduce spending on investment and to cut staff. Charlotte Dendy, economic surveys manager at the CBI, noted, ‘With sentiment among retailers negative for two years now, businesses expect to cut back further on investment, while continuing to reduce headcount.’

The survey found that retailers raised prices at the slowest pace since February 2025, a pattern the CBI linked to weak demand. Bank of England officials are monitoring pricing trends and business profit margins as they assess whether interest rates may need to rise later this year to address inflation pressures tied to higher energy costs.

Retailers cited higher energy prices related to the Iran war as a pressure on household spending and on firms’ operating costs. Consumer confidence measures have been fragile: the GfK index fell to its lowest level since October 2023 in April and showed only a small improvement in May.

Official figures for April painted a different picture. Retail sales volumes excluding fuel were 1.1% higher than the same month a year earlier and unchanged month on month. Those official data cover a wider range of retailers than the CBI survey, which reflects responses from businesses within the sector.

Public companies reported mixed results. Kingfisher, the owner of B&Q and Screwfix in the U.K., recorded a 0.7% decline in first-quarter sales but kept its full-year profit guidance.

Retailers reported that the outlook remains cautious. Companies said they will take a more conservative approach to investment and staffing in coming months while monitoring consumer spending and signals from the Bank of England.