UK retail sales fall for ninth consecutive month

The Confederation of British Industry's (CBI) retail sales gauge for the UK showed a sharp decline in June 2025, falling to -46 from -27 in May. This marks the ninth consecutive monthly drop and was well below the market consensus of -32, indicating continued weakness in the sector.

The poor performance comes amid ongoing challenges, with the data painting a grim picture of consumer sentiment and retail conditions. A further decline is anticipated in July, with projections suggesting a steeper drop to -49%, signaling that the downward trend may persist in the near term.

Retail sales for this time of year were considered particularly weak, at -37%, well below seasonal expectations, and are forecast to remain below historical norms in the coming month (-38%). This signals that even during what is typically a busier period for retailers, demand is not meeting expectations, reflecting broader economic pressures on household spending.

In contrast, online sales showed modest growth, rising by 6%, but this was slower than May’s growth rate. Online retail continues to be a bright spot, though it is facing a gradual slowdown in the pace of expansion. The growth rate for July is expected to remain positive but moderate, at +8%, indicating that while e-commerce is still expanding, the pace is not as robust as it has been in previous months.

Wholesale sales, which reflect broader supply chain and distribution trends, fell year-on-year by 34%, although this decline was slower than the -37% drop recorded in May. This suggests that while the wholesale sector is still under pressure, the rate of deterioration may be easing.

Similarly, motor trade sales also continued their decline, falling by 37%, as consumers remain cautious with big-ticket purchases, likely influenced by higher costs and economic uncertainty.

Perhaps most concerning is the significant drop in orders placed with suppliers, which fell at the fastest pace since December 2023, plunging by 51%.

This suggests that retailers and businesses are anticipating weaker demand going forward and are adjusting their stock levels accordingly. In fact, stock levels relative to expected demand rose to +26%, significantly above the long-run average. This indicates that businesses are overstocking in anticipation of lower sales, a worrying sign of a potential inventory glut, especially as demand continues to falter.

Overall, the data paints a picture of a retail sector under stress, with weakening demand across both physical and wholesale channels, although online sales continue to provide some resilience. The outlook remains cautious, with further declines expected in the near future.

The continued contraction in retail activity is a reflection of broader economic challenges, including high inflation, cautious consumer spending, and the tightening impact of higher interest rates. Retailers may need to adapt quickly to shifting consumer behavior and expectations in order to navigate the challenging environment ahead.