CBI point to pressure on 'family budgets' as January sales drop

The Confederation of British Industry (CBI) has pointed to the increasing pressure of inflation alongside weak wage increases as the cause behind a drop in retail sales this month.

According to figures from the latest CBI Distributive Trades Survey, 44% of retailers saw sales volumes fall during the first two weeks of January compared with 2010 figures. In comparison, just 22% reported a rise, creating an overall balance of -22%, which is the worst seen since March 2009. Retailers reported particularly disappointing sales with the survey producing a reading of -20% with orders down -14%.

CBI chief economic adviser Ian McCafferty admitted that much of the early momentum of the January sales had been erased. "Shoppers have reined-in spending across the board at the start of the New Year after taking advantage of early discounting last month," he said. Mr McCafferty cited the UK's ongoing financial difficulties, saying, "Consumers are still holding off particularly from buying big ticket items. Family budgets are under continuing pressure with inflation still high and wage increases modest."