A Deutsche Bank report this week has sent the share prices of a number of UK retailers down on the back of falling consumer confidence, and it looks like retailer confidence is low too if the latest CBI retail report is a guide.

First, a quick look at that Deutsche Bank report. It showed UK consumer confidence at a post-pandemic low and raised fears that autumn will be tough for discretionary retailers. Big names such as Next, M&S and Primark owner ABF saw their share prices falling with ABF’s price down as much as 6% in recent days.

It coincided with the latest CBI retailer survey that showed retail sales volumes “fell at a strong pace in the year to August, extending the downturn to an 11th consecutive month”.

That said, the business body reported retailers expecting the pace of decline to ease in September. So perhaps those share price falls may be reversed soon?

Regardless, the CBI report wasn’t exactly upbeat. It said weak demand and gloomy sentiment continue to weigh on retailers’ investment and hiring plans. Price pressures remain elevated, with selling prices rising at their fastest rate since November 2023.

Year-on-year retail sales volumes fell at a strong pace in August with a weighted balance of -32% from -34% in July. Sales are expected to decline at a slower rate next month (-16%).

First though, an explanation. Those figures don’t mean that the volume of sales fell by 34%. Instead, the weighted balance showed 34% of retailers saying their sales fell to one degree or another.

Back with the report, retail sales for the time of year were judged to be “poor”, to a somewhat greater extent than in July (-19% from -10% in July). Next month’s sales are set to remain below seasonal norms to a similar degree (-20%).

Sentiment among retailers remained poor, with their business situation expected to deteriorate over the coming quarter, but to a lesser extent than last quarter (-10% from -29% in May).

Retailers also expect to reduce capital expenditure over the next 12 months (compared to the previous 12) to a slightly lesser degree than in May (-42% from -47% in May), but intentions remain poor by historical standards (long-run average of -3%).

Meanwhile retail employment continued to decline at a broadly unchanged rate in the year to August (-14% from -15% in May). Headcount is expected to fall at a slightly quicker pace next month (-19%).

And the survey showed retail selling prices rose in the year to August at the fastest rate since November 2023 (+65% from +35% in May). Retailers anticipate selling prices to increase at a relatively slower pace in September (+43%).

Online retail sales volumes were broadly flat in the year to August (+3% from +4% in July) but are expected to contract at a fast rate in September (-35%).

Martin Sartorius, CBI Principal Economist, said of this: “Retailers endured another tough month in August. Weak demand and higher labour costs continue to put pressure on margins, dampening sentiment across the retail and wider distribution sector. This downbeat outlook is reflected in firms’ plans to scale back investment and hiring.  

“The government’s fiscal decisions are continuing to bite, and retailers’ struggles send a clear signal: business cannot be asked to balance the books again at the Autumn Budget. Building business confidence through delivery must be the priority — starting with a rethink of the Employment Rights Bill, which risks piling on unnecessary costs and holding back jobs and investment.”