UK retail sales spiral to 40-year low amid inflation storm

In a stark warning for the economy retailers across the United Kingdom are grappling with their most severe sales downturn in over four decades as escalating geopolitical tensions linked to the Iran conflict fuel rising inflation fears and weaken consumer confidence.

A latest survey by the Confederation of British Industry (CBI) highlights a rapidly deteriorating retail environment marked by declining demand and cautious household spending.

The CBI’s monthly retail sales volume index plunged to -68 in April down sharply from -52 in March, marking its lowest level since records began in 1983.

The data shows that 77% of retailers reported a decline in sales compared to the same period last year while only 9% recorded growth, underscoring the scale of the contraction.

According to the business group weakening consumer confidence played a decisive role in curbing spending throughout April. The outlook for the coming month appears equally concerning, with expectations for May dropping further to -60, compared to -49 in March representing the most pessimistic sentiment since March 2021, during the peak of the COVID-19 pandemic.

CBI economist Martin Sartorius stated that as the economic impact of the Iran conflict becomes increasingly evident businesses are urging the government to step in and ease mounting financial pressures. He emphasized that reducing the cost of doing business is essential to addressing the broader cost-of-living crisis faced by consumers.

The CBI has called on policymakers to reconsider measures that could further increase employer costs, including proposed employee rights legislation. It also urged the government to introduce relief through reduced property taxes and lower electricity costs to support struggling retailers.

The survey is based on responses from 61 retail chains, collected between March 26 and April 14.

Analysts note that the downturn appears more severe than trends reflected in other economic indicators following heightened tensions involving the United States and Israel earlier this year. These developments contributed to the closure of the strategically vital Strait of Hormuz, a key global oil supply route, intensifying economic uncertainty.

Adding to the pressure, the UK’s long-standing consumer confidence index, compiled by GfK, has dropped to its lowest level since October 2023. Meanwhile, a separate CBI survey of manufacturers revealed that business optimism has fallen to its weakest level since the onset of the COVID-19 crisis.

Despite the sharp decline in overall sales volumes, a related measure assessing whether sales were “good,” “bad,” or “average” for the time of year recorded a comparatively smaller drop, falling to -32 in April from -23 in March though still reflecting a persistently challenging retail landscape.