Retail sales in June suffered their worst year-on-year fall recorded, according to latest data from the CBI’s monthly Distributive Trades Survey, while grocery and food sales continued to buck the trend.

Despite the fall, the CBI is playing down the comparison with last year, as June 2004 was a particularly good month for retailers.

As a result, sales volumes compared with a year ago recorded the sharpest fall in the survey’s 22-year history and stores are expecting a similar pattern in July.

According to the study, 42 per cent of retailers said their sales volumes were down over the year to June, compared with 23 per cent saying they were up - a balance of minus 19 per cent, which compares with minus seven per cent in May and minus 14 per cent in April.

Despite this, sales for the time of year in this survey were considered poor by retailers but not as bad as they were in the spring.

With sales volumes weak, retailers cut back on orders placed with suppliers at the fastest rate since January 1999. A further reduction in orders is expected in July, although at a slower rate.

Despite the gloom grocery sales volumes continued to increase strongly, with specialist food stores the only other retail sector reporting an increase.

John Longworth, executive director of Asda and chairman of the CBI's DTS Panel, said: “A year ago retailers were reaping the benefit of Euro 2004 which was credited with boosting sales of everything from football clothing to TVs and beer.

“But while this may explain part of the record year-on-year decline now registered, there is no doubt that the underlying picture is also bad.”

Retail bosses are now calling for action from the Bank of England.

Kevin Hawkins, director general with the British Retail Consortium, said: “We are not surprised at the figures and have been saying for some months that trading conditions on the high street would get worse if the Bank of England failed to take action.

“This is exactly what is happening and even City economist have now come round to our views that a significant cut in rates is essential to prevent further deterioration.”

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