UK retailers have this month suffered their sharpest year-on-year fall in sales volumes since May 2010, a key survey has revealed.

The latest distributive trades survey, from the Confederation of British Industry, underlines the troubles facing retailers and consumers as the UK economy struggles to sustain recovery even before implementation of the bulk of Chancellor George Osborne’s swingeing cuts in public spending.

Samuel Tombs, UK economist at consultancy Capital Economics, said: “August’s CBI distributive trades survey continues the recent run of very weak data on the consumer sector.

“Whichever way you look at it, it’s clear that fiscal austerity, rising inflation and increasing unemployment are combining to put an end to any recovery on the high street.”

Noting that the survey had been conducted between July 28 and August 16, Mr Tombs said: “It looks as if the recent falls in equity prices and the riots, which both occurred at the start of the month, may have taken their toll on consumer confidence and spending.”

Forty-six per cent of retailers said their sales volumes in the first half of August were lower than in the same period of last year, and only 31% said they were higher. The rounded net 14% reporting that their sales in August were weaker than a year earlier signalled the steepest year-on-year drop in volumes since May 2010.

The CBI survey signalled a sharp fall in sales in the durable household goods, and hardware and do-it-yourself categories. And clothing retailers signalled their steepest year-on-year fall in sales since August 2009.

However, grocers saw a return to year-on-year growth in sales in August.

Overall, retailers predicted a further year-on-year fall in sales volumes in September.

And they were more negative about the general business situation than they have been at any time since February 2009.

A net 7% of retailers reported that their employment levels in the first half of this month were lower than at the same time last year.

However, the net 1% predicting employment levels next month would be lower than in September last year was the least negative prediction on employment since February 2004.