British retailers reported the sharpest drop in sales volumes in eight months in March and they expect to see little improvement next month, an industry survey showed on Tuesday, showing signs of caution among consumers.

The Confederation of British Industry's monthly gauge of retail sales fell in the 12 months to March to -41 from -23 in February, the lowest reading since July last year.

The survey's gauge of expected sales for the month ahead was steady at -30.

"Firms across the retail and wholesale sectors reported that global trade tensions and the autumn budget are weighing on consumer and business confidence, which is leading to reduced demand," said Martin Sartorius, principal economist at the CBI.

"The combination of a faster fall in retail sales volumes and firm declines in wholesale and motor trades resulted in the total distribution sector seeing the sharpest annual sales drop in a year."

Retailers and other businesses have complained about a 25 billion-pound ($32 billion) rise in employers' social security contributions in the Labour government's first budget last October as well as other cost increases due to come into force next month.

(Reporting by Andy Bruce Editing by William Schomberg)