British retail sales declined this month after a modest rise in April but stores expect sales volumes to stabilise in June as consumer confidence improves and energy prices fall, a survey showed on Thursday.
The Confederation of British Industry's (CBI) monthly distributive trades index fell to -10 in May from +5 in the previous month.
A measure of expected sales in the month ahead rose to zero from -7
Martin Sartorius, principal economist at the CBI, said retailers had some reason to be optimistic about the outlook.
"Consumer sentiment has been improving and households’ energy bills are set to decline from July," Sartorius said.
"The resulting boost to incomes should help support retail sales going into in the second half of this year."
Retailers also reported acute price pressures, with price growth in the 12 months to May remaining near multi-decade highs. Shops expect prices to rise at the same pace next month.
Britain's high inflation rate fell by less than expected to 8.7% in April, down from 10.1% in March, and a 41-year peak of 11.1% in October last year.
However, consumer price inflation remains above the Bank of England's 2% target and analysts now expect the central bank, which has raised interest rates 12 times in a row since December 2021, to increase Bank Rate further.
The CBI said retail employment fell for the third quarter running, down to -48 in the year to May, the biggest drop since February 2009.
Reporting by Suban Abdulla, editing by Andy Bruce