Retailers report surprise sales drop in August - CBI survey

British retailers reported an unexpected drop in sales in August, a survey by business lobby CBI showed on Thursday, indicating that the Olympics failed to give shops the much needed boost.

Most British retailers have been struggling because consumers have been reluctant to spend as rising prices, tax increases and high unemployment are hurting their spending power.

The reported sales balance of the CBI's monthly distributive trades survey fell to -3 compared to economists' forecasts for an increase to +15.

The expected sales balance for September stood at +6, indicating that retailers expected higher sales than a year ago.

Official retail sales data for July showed unexpected growth, and an upward revision to June, suggesting the sector was on a firmer footing than previously thought.

But the CBI's quarterly survey showed that retailers took the gloomiest view of their business situation since February 2009, the height of the financial crisis.

"Although this summer's events created a mood of celebration across the nation, these figures would suggest this positivity did not extend to the high street," said Judith McKenna, chief operating officer of Asda and chairwoman of the CBI panel.

"However, although retailers expect the overall business situation to worsen in the coming three months, they still expect sales to rise year-on-year in September," she added.

Department stores and recreational goods retailers were the hardest hit in August, the CBI said. Retailers of furniture and carpets as well as shoe and leather shops fared the best.