The situation: UK retail sales momentum stalled in April, with British retailers reporting the steepest YoY decline since the Confederation of British Industry began its monthly survey in 1983. The survey, which covered 61 retail chains, was conducted between March 26 and April 14.

CBI’s retail sales volume measure fell to -68 in April from -52 in March, as 77% of firms reported lower sales compared with a year earlier, and just 9% saw an increase, per Reuters. The outlook is also deteriorating: Expectations for May dropped to -60 from -49, marking the weakest outlook since March 2021 during the pandemic.

Online sales volumes showed a similar pattern, with the CBI balance falling to -51 from -11 in March, the steepest drop since January 2024. Despite that, online retailers are somewhat more optimistic, expecting the ecommerce sales balance to rise to +4 next month, signaling an expected rise in companies reporting growth.

Zooming out: UK retail had been holding up prior to the war in Iran, with sales volumes growing 2.7% YoY in Q1, per the UK’s Office for National Statistics.

While we had expected core retail sales to grow 3.8% this year, down from 4.2% last year, rising energy prices are now likely to constrain demand.

Implications for retailers: The war in the Middle East is creating meaningful headwinds for UK retailers, as weakening sentiment and higher essential costs squeeze discretionary spending. GfK’s consumer confidence index has fallen to its lowest level since October 2023, reinforcing the risk of a broader pullback.

As more household budgets are absorbed by groceries, fuel, and utilities, retailers will need to sharpen their value proposition to maintain demand. Those that can clearly communicate value—or help consumers stretch budgets—will be better positioned as spending becomes more selective.

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