(Sharecast News) - Retail sales fell sharply in June, an industry survey showed on Thursday, weighed down by weak sentiment and rising cost pressures.
According to the latest distributive trades survey from the Confederation of British Industry, sales volumes for the time of year were judged to be poor, with a balance of -40. Down 5 points on May, the print was the lowest in more than two years.

Retailers also remained pessimistic going forward, with sales volumes expected to remain poor for the time of year in July. Online sales, however, were slated to recover at a strong pace, with a balance of 37.

Wholesale sales volumes fell at a slower rate, with the balance improving to -20 from -26. But a renewed downturn was forecast for the following month, at -43.

Respondents to the survey attributed the depressed activity to weak sentiment and rising cost pressures.

Martin Sartorius, the CBI's lead economist, called it a "gloomy start" to the summer. He continued: "A sharp fall in year-on-year retail sales was mirrored across the broader distribution sector, with wholesalers and motor traders seeing firm sales declines.

"Businesses need clarity and stability at a time when confidence remains fragile."

War in the Middle East has pushed up energy prices, reignited inflationary fears and dampened interest rate expectations worldwide.

The US and Iran have signed a 14-point memorandum of understanding, under which they have agreed to cease all fighting and reopen the Strait of Hormuz while a permanent peace deal is negotiated.

Oil prices have fallen sharply in response, but tensions remain high and there is still no guarantee a long-term agreement will be struck.

In addition, domestic uncertainty has spiked after prime minister Keir Starmer was forced out. He resigned earlier this week, but it is not clear when his likely successor - newly-elected MP Andy Burnham - will take over.

Sartorius added: "As the government transitions to a new prime minister, the focus must remain on creating the conditions for growth by tackling the cost of doing business."

There were 186 respondents to the survey, which was in field between 27 May and 12 June, 86 of which were retailers and 98 wholesalers.

A balance is the weighted difference between the percentage of firms reporting an increase and those reporting a decrease.

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