Retailers reeling from one of the toughest summers on the high street in years are braced for further pain over the coming weeks.
A study by the CBI found one in five believed the overall business outlook would deteriorate in the next quarter - the first time in seven years that firms had been more despondent than hopeful about prospects.
The CBI's underlying annual sales trend - measured over three months to cancel out blips - is also at the weakest in the survey's 22 year history.
That was after 45 per cent of retailers reported August sales volumes down on a year earlier, compared with 27 per cent who reported a rise. The balance of minus 18 per cent is despite heavy price discounting and longer than normal summer sales.
John Longworth, who chairs the CBI's distributive trades survey panel, said: "Conditions in August continued to be very tough for retailers and many fear the outlook is going to get worse before it improves, despite the recent interest rate cut.
"Some held earlier and longer summer sales despite margins already being very tight but there has been little sign in this survey of a response from consumers."
Mr Longworth, who is an executive director at Asda, said the housing market slowdown continued to have a negative effect on many retailers, particularly DIY and furniture chains who had benefited from the boom times of recent years.
Two-fifths - 38 per cent - of all respondents reported that prices were lower in August than a year ago while 18 per cent noted a rise. And around 34 per cent believe the gloom will continue into next month with further declines in volumes.
With sales down and prices down there have been job losses: a third of retailers (35 per cent) had fewer employees this year than a year ago, and only a quarter (26 per cent) had more - a balance of minus nine, which is expected to grow to minus 11 next month.
The depressing picture continued into the motor trade which traditionally enjoys an upturn at this time of year with the appearance of the new registration plates on dealers' forecourts.
But more than half (51 per cent) fear sales will be down in September compared to a year ago, maintaining the recent trend. Just a fifth (20 per cent) say they will rise, a balance of minus 31 per cent.
Overall, one in five retailers say the overall business outlook - including sales volume, price, cost and supply issues - will deteriorate over the next quarter compared to just 13 per cent who say it will improve, a balance of minus seven per cent.
The CBI's distributive trades survey drew 202 responses and was carried out between August 2 and August 17.
It is the latest in a run of grim studies on the sector, although recent data offered tentative signs of an upturn, particularly following the cut in interest rates to 4.5 per cent by the Bank of England.
National Statistics said recently that sales volumes were 0.3 per cent down on a month earlier in July - not as bad as feared as it included the impact of the bombings in London.
The British Retail Consortium said this month's reduction in the cost of borrowing was "welcome" but would take several months to have any significant effect on consumer spending.
