Internet Sales Volumes Fall At Fastest Pace On Record: CBI

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Clear evidence of a consumer downturn has been offered up by the CBI, which reports that retail sales tumbled for a sixth consecutive month.

The CBI's monthly Distributive Trades Survey revealed retail sales fell in the year to October, and at a faster pace than last month (weighted balance of -36% from -14% in the year to September).

Internet sales volumes fell at the fastest pace on record at -78%, from -3% in September. Online sales are expected to contract again next month but at a relatively slower rate (-45%).

Falling retail volumes are consistent with the official ONS retail sales series, which last month confirmed that rising prices continue to impact retailers' sales volumes.

Above: Volume of sales compared to a year earlier. Image: CBI.

The CBI blames the cost of living and rising interest rates for the sector's woes, but retailers will also find consumers have their limits and appear increasingly unwilling to pay the higher prices they are being charged.

"While slowing inflation should help to bolster households’ income in the coming months, retailers will continue to face headwinds from higher energy and borrowing costs. The Autumn Statement could help relieve some of the tax burden on the sector by freezing business rates from rising with inflation for another year," says Martin Sartorius, the CBI's Principal Economist.

Retailers judged sales to be poor for the time of year (-10% from +5% in September). Sales volumes are expected to fall short of seasonal norms to an even greater extent next month (-21%).

Above: Volume of internet sales compared to a year ago. Image: CBI.

Orders placed upon suppliers continued to fall in the year to October, and at a faster rate than last month (-37% from -19% in September).

Retailers expect to cut back sharply on orders again next month (-30%).

Retailers reported stocks as "too high" relative to expected sales in October (+27% from +6% in September).

Stock positions are expected to soften somewhat next month (+19%).