Press release

23 Feb 2021 London, GB

February CBI survey points to consumers remaining cautious – EY ITEM Club comments

The February CBI distributive trades survey shows that consumers are still being cautious in their spending after a significant 8.2% month-on-month (m/m) fall in retail sales volumes in a lockdown-affected January.

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Related topics Growth COVID-19
  • The February CBI distributive trades survey shows that consumers are still being cautious in their spending after a significant 8.2% month-on-month (m/m) fall in retail sales volumes in a lockdown-affected January
  • The CBI's sales balance could only improve to -45% in February after falling back significantly to an eight-month low of -50% in January from -3% in December
  • The CBI survey indicates that retailers are pessimistic about sales prospects in March, with a record low balance of -62% expecting sales volumes to be up year-on-year (y/y)
  • This survey provides further evidence that the economy has been more affected by the current lockdown and tight restrictions than it was by the restrictions in Q4 2020. Consumers, in particular, appear to be markedly more cautious. With lockdown set to largely last through the quarter, the EY ITEM Club expects the economy will experience a clear contraction in Q1 – possibly around 4% quarter-on-quarter (q/q)
  • After a very challenging Q1, the EY ITEM Club expects the economy to benefit progressively through 2021 from the roll-out of COVID-19 vaccines
  • Consumers look well-placed to play a key role in a pick-up in the UK economy from Q2 given the recent high savings ratios, although much will depend on how much unemployment ultimately rises. After an extended period of weakness, business investment is expected to gain momentum over the course of the year as companies grow more confident in the economy
  • The EY ITEM Club’s recent Winter 2021 forecast sees GDP growth of 5.0% in 2021, followed by expansion of 6.5% in 2022. This means the economy regains its peak level of Q4 2019 in Q3 2022. 

Howard Archer, chief economic advisor to the EY ITEM Club, says:

“The February CBI distributive trades survey points to still-weak retail sales over the first part of the month after a significant decline in January as non-essential retailers remained closed due to lockdown. The survey was carried out 27 January to 15 February.

“The CBI’s sales balance could only improve to -45% in February after falling significantly to -50% in January – the lowest level since last May – from -3% in December. The balance had previously weakened to -25% in November, when non-essential retailers had also been shut by lockdown. It is notable that the balance fell back much more in January than it had done in November.

“Furthermore, a balance of 38% of retailers considered sales volumes in February to be below average for the time of year.

“The CBI indicated that among the sales sub-sectors, only grocers saw volume growth in the year to February. Meanwhile online sales grew at a record rate in February.

“Unsurprisingly, with restrictions on non-essential retailers set to remain in place through to mid-April, retailers were downbeat about sales prospects in March. Specifically, a balance of -62% expected retail sales volumes to be up year-on-year in March. This is the weakest expectations balance since the series started in 1983.”

Retail sales saw decline in January as consumers appeared more cautious

Howard Archer continues: “The latest ONS data showed retail sales volumes fell 8.2% month-on-month in January as they were affected by the renewed closure of non-essential retailers during the latest lockdown. This was double the 4.0% monthly decline seen in November during the previous lockdown. Retail sales volumes were down 5.9% year-on-year in January.

“January’s fall in retail sales occurred despite a rise in online sales, which were up 9.2% month-on-month and 72.7% year-on-year in value terms. This took the share of online sales up to a record 35.2% of total sales.”