The high street remained under intense pressure in May as sales plunged at their fastest pace in more than a year.
There was no sign of an upturn after retailers were hit by bleak weather in March and a subdued performance over Easter, CBI figures showed.
The latest figures continue a trend of weakened retail activity so far this year.
Despite hopes for improvement in the wider economy, firms reported falls in clothing and footwear sales, although the grocery sector was flat and furniture, carpet and recreational goods sales lifted.
The survey found there were modest hopes for improvement next month, but plans for investment among retailers were at their weakest since the start of last year.
Overall, around 23% of companies said sales volumes were up on a year earlier and around 33% said they were down a worse than expected decline.
It comes after latest official figures showed households being squeezed with wages growth of 0.4% at a level well below the rate of inflation.
Barry Williams of Asda, chairman of the CBI’s survey panel, said: “Retail sales growth has weakened since the start of the year as households continue to feel the pinch, with wages failing to keep pace with the cost of living.”
Official data from the Office for National Statistics has already shown retail sales down 1.3% in April.
Howard Archer, chief UK and European economist at IHS Global Insight, said: “While retail sales are clearly being hindered by largely disappointing weather limiting sales of summer fashions and some outdoor goods, the current softness in sales appears to run deeper than this.
“Clearly, how much consumers spend over the coming months is crucial as to whether the economy can build on the 0.3% quarter-on-quarter growth achieved in the first quarter and the prospects for this look mixed.”
l Sports Direct yesterday signalled major international expansion after announcing it had taken majority stakes in two overseas sportswear brands.
The firm said it had agreed to acquire a 51% stake in Sports Eybl and Sports Experts, in Austria, and had separately acquired a 60% holding in Sportland International Group, the largest sporting goods firm operating in the Baltic region.