The CBI recorded the steepest decline in the 22-year history of the report, with half of the retailers questioned saying September sales were down on a year ago.
The report says that expectations for October are equally gloomy. Retailers have cut orders to suppliers, which has had a knock-on effect in other sectors such as manufacturing.
Although grocers and specialist food retailers are holding firm, all other sectors surveyed have weakened compared with a year ago. The worst affected are furniture and carpets, reflected in Furnitureland's descent into administration this week.
John Longworth, executive director of Asda and chairman of the CBI DTS panel said: 'The reluctance of consumers to spend money is probably due to a variety of factors, including higher fuel bills. With only three months to go until Christmas, retailers will be pulling out all the stops to get shoppers back into the high street and spending money.'
The survey was conducted between August 30 and September 21. There were 123 responses.
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