LONDON, May 26 (Reuters) - British retailers reported lower sales in May against a backdrop of weak demand, but not the record downturn they had reported a month earlier, according to figures released by the Confederation of British Industry on Tuesday.
The CBI's monthly retail sales balance rose to a three-month high of -46 in May from -68 in April, the series' lowest reading since it began in 1983.
The balance measures the difference between the percentages of firms reporting rises and falls in sales
volumes compared with the same month a year earlier.
Expected sales for June rose to -36 from the -60 expected for May, while sales for the time of year slipped to their lowest since June 2025 at -35, down from -32 in April.
"With sentiment among retailers negative for two years now, businesses expect to cut back further on investment, while continuing to reduce headcount," CBI economic surveys manager Charlotte Dendy said.
Last week official retail sales data for April - which covers a wider range of stores than the CBI measure - showed that sales volumes excluding fuel were 1.1% higher than a year earlier and unchanged from the month before.
Even so, businesses are worried that a surge in energy prices caused by the Iran war will squeeze households' disposable income as well as raising their own costs.
Britain's longest running consumer sentiment survey, from GfK, fell to its lowest since October 2023 in April and rose only slightly in May.
The CBI said retailers raised prices this month by the least since February 2025, which it attributed to weak demand.
The Bank of England is keeping a close eye on how businesses' prices and profit margins develop as it judges whether it will need to raise interest rates later this year to limit the inflation shock from the Iran war.
Earlier on Tuesday, European home improvements retailer Kingfisher - which owns B&Q and Screwfix in the UK and Castorama and Brico Depot in France - reported a 0.7% fall in first-quarter sales but maintained its full-year profit guidance.
(Reporting by David Milliken, editing by Andy Bruce)
