Retail sales fell at their fastest pace in a year and stores expect a further deterioration in August, as hard-hit consumers clamp down on spending, a survey by the Confederation of British Industry showed.
The CBI distributive trades survey's reported sales balance fell to -5 in July from -2 in June, the lowest reading since June 2010.
The reading also confounded hopes that the traditional summer discounting period would drive sales higher. Analysts had expected an improvement in the balance to 0.
The expected sales balance for August fell to -12 from +2 in July, also the lowest in a year.
"Rising prices, especially for fuel, continue to impact consumer confidence and make life tough on the high street" said Judith McKenna, chair of the CBI's Distributive Trades survey panel and chief operating officer of supermarket chain Asda.
"There's been a fall in real disposable income since the beginning of the year, with shoppers either cutting back or trading down to make their declining spending power go further," she added.
Grocery stores were particularly hard hit, the survey showed, reporting a negative sales balance of -16 -- the lowest since December 2008. Footwear and leather stores recorded a sales balance of -84, the weakest since March 2009.
City A.M. Reporter