Retail sector sales grew at the fastest rate in almost a year and a half in the year to May, as retail price inflation eased.
However, the CBI distributive trades survey found that retailers expect a slight decline next month and the sector's investment intentions for the year ahead have deteriorated.
Selling price inflation in the retail sector eased considerably in May, CBI report found, with a weighted balance of +20% the lowest since August 2020, down from +54% in February and below its long-run average.
Prices are expected to continue to increase at only a slightly faster pace next month (+30%).
Retail sales volumes grew modestly in the year to May, with a balance of +8% from -44%, at the fastest pace since December 2022.
The survey, which polled 137 businesses involved in the sector, of which 56 were retailer chains, found that sales are expected to fall slightly next month, but to remain broadly in line with seasonal norms, with a balance -4% points
Conditions elsewhere in the sector also appear to be more mixed, with headcount continuing to fall and investment plans weakening further.
Retailers’ investment intentions for the year ahead deteriorated to a balance of -25% from -9% in February.
"May’s increase in retail sales adds to the swathe of data pointing to an improvement in activity over the near term," said Alpesh Paleja, CBI lead economist.
"Falling inflation, and continuing real wage growth will contribute to a healthier consumer outlook, in turn supporting the retail sector further.
“That being said, retailers are restrained about their business situation over the coming quarter. Headlines sales are expected to fall moderately next month, and it’s concerning that retailers’ investment intentions have deteriorated noticeably."