The pound fell this morning after data revealed retail sales dropped sharply in the year to October.
The latest monthly CBI Distributive Trades Survey found retail sales fell at the fastest rate since March 2009, when the financial crisis was at its height. Half of retailers surveyed reported volumes were down on last year.
Retailers expect sales volumes to stabilise in the year to November, but orders are expected to see a further decline, albeit at a slower pace.
Rain Newton-Smith, CBI Chief Economist, said: “It’s clear retailers are beginning to really feel the pinch from higher inflation. While retail sales can be volatile from month-to-month, the steep drop in sales in October echoes other recent data pointing to a marked softening in consumer demand.”
She said that the government could help retailers, who employ around 3m people in the UK, by switching its indexation of business rates from RPI to CPI.
The data comes after figures from the British Retail Consortium (BRC) found retail employment dropped three per cent in the three months to September.
The BRC, along with the CBI and others, have written to the chancellor to demand action on business rates in the Autumn Budget to ease the rising costs faced by the sector.