The South East’s high streets endured another month of falling sales and expect the hard times to continue in October, but supermarkets enjoyed solid sales growth, according to the CBI.

Commenting on the UK’s leading business organisation’s latest Distributive Trades Survey, CBI South East Regional Director Malcolm Hyde said: “Shoppers are increasingly focusing on price as the economy continues to slow and household budgets get tighter. There has been a marked migration to the value end of the market, and many have cut back on luxuries.

“Retailers of big ticket items like furniture and white goods, which are closely tied to the ailing housing market, continue to suffer. Supermarkets have fared much better in these difficult times, particularly those that have realigned their range to match the price conscious.”

According to the survey, 21 per cent of retailers said that the volume of sales in the first half of September was up on last year, while 48 per cent said they were down.

The resulting balance of -27 per cent – where a balance is the difference between the percentage of retailers reporting an increase and those reporting a decrease – marks a third consecutive month of sharply contracting sales, but is better than firms had feared (-42%), and is an improvement on the survey record low in August (-46%). Nevertheless, the outlook for October remains very weak (-30%).

The three-month moving average of sales volumes, which smoothes out monthly volatility, continued on its downward trend to a balance of -36 per cent.

A balance of 46 per cent of firms said their volume of sales for the time of year was poor, and a similar balance (44%) expect a tough October.

Slow demand on the high street has had a knock-on effect on the volume of orders made with suppliers. A balance of 39% of retailers reported a year-on-year fall in order volumes, which is a slight improvement on August (-56%). Stock levels were described as more than adequate to meet expected demand by a net 20% of firms.

Looking at individual sectors, the supermarkets continued to weather the economic slowdown, and a balance of 37% of grocers reported sales growth. All the other sectors saw a fall in sales compared to a year ago, especially those linked to the housing market.

Mr Hyde added: “Sadly, there has been no Indian summer after the sales washout of August, and the retail outlook for early autumn remains bleak. Consumers are feeling the brunt of the economic slowdown as the UK endures what is likely to be a short and mild recession.

“As inflationary pressures ease over the next few months, the Bank of England should have some leeway to lower interest rates, and a 0.5% cut in November would provide some welcome relief to consumers and businesses.”

Wholesalers fared better than they had expected, and only a balance of four per cent of firms said that sales volumes were down over the year to September. A balance of 14 per cent expects volumes to fall in October. Clothing, textiles & footwear wholesalers reported sales growth on a year ago, while builders’ merchants had a third consecutive difficult month.

Over the year to September, motor traders saw sales volumes fall heavily (a balance of -78%) for the fourth month running, and October is set to be similar (-86%). Both sellers of vehicles and parts & accessories share the weak demand.