View graphic: CBI trades survey

Retailers have suffered their grimmest month in a quarter of a century as wet weather and consumers' financial worries hit sales, new figures suggest.

Some 60 per cent of retailers said that their sales in the first half of August were lower than a year ago, while 13 per cent said they had risen, according to the CBI's monthly survey. The resulting balance of minus 46 per cent was a drop from minus 36 per cent in July and the lowest figure since the survey began in 1983.

Andy Clarke, chairman of the CBI distributive trades panel and Asda's retail director, said: “This has been a summer that many retailers would rather forget.”

Shops selling carpets, furniture and household goods were worst hit, with every retailer in these sectors reporting a fall in sales for a second successive month. Even trade at supermarkets, which have been enjoying good business despite the economic chill, dipped. The balance of grocers reporting a rise, rather than a fall, in sales was 7 per cent, down from 19 per cent in July.

A balance of 31 per cent of retailers said their employment levels fell in August, with a further 31 per cent expecting further job cuts in September.

The figures came as consumer confidence edged up slightly, but stayed 32 points lower than in August last year, according to the GfK NOP Index.

David Blanchflower, a member of the Bank of England's Monetary Policy Committee, said that two million workers may be jobless by Christmas and that big cuts in interest rates were needed to stop long economic downturn. He indicated he would vote for a rate cut of more than a quarter point at next week's committee meeting.

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