UK retail sales fell more than expected last month after the death of Queen Elizabeth II curtailed to activity and cost-of-living pressures hit harder.
The volume of goods sold in shops and online dropped 1.4 per cent in September after a revised 1.7 per cent decline the month before, data from the Office for National Statistics showed Friday. Economists had expected an 0.5 per cent drop.
Sales volumes were 10.2 per cent below their level before the coronavirus hit, reflecting a plunge in consumer confidence and the soaring cost of goods that’s forcing people to spend more to buy less.
“Retail sales reflect consumer angst over the very quickly deteriorating economic landscape,” said George Lagarias, an analyst at Mazars.
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A separate report showed UK government borrowing climbed more than expected in September, underscoring the vulnerable state of the public finances even before the hit from outgoing prime minister Liz Truss’ disastrous financial plan.
The deficit for the month was £20 billion (€22.94 billion), the ONS said, well above the £17.5 billion economists forecast. That left total in the first six months of the fiscal year at £72.5 billion — broadly in line with forecasts from the Office for Budget Responsibility in March.
The pound extended losses after the reports, trading 0.5 per cent lower on the day at $1.1178.
Motorists reduced fuel purchases, with a separate survey showing 41 per cent were cutting back on non-essential journeys because of a surge in petrol prices since the pandemic.
The ONS said there was a particular hit to fuel around the time of the bank holiday granted to mark the queen’s funeral. Statisticians made no adjustment to the figures for the bank holiday as they usually do.
Food stores had a big drop in the month, reflecting a downward trend since the end of Covid-19 restrictions allowed restaurants to reopen. Supermarkets reported cost pressures, with rising prices reducing the volume of purchases.
“Retailers told us that the fall in September was partly because many stores were closed for the Queen’s funeral, but also because of continued price pressures leading consumers to be careful about spending, said Darren Morgan, director of economic statistics at the ONS.
Consumer confidence lingered near historic lows in October, a survey from GfK said earlier Friday. The market research firm’s measure of sentiment rose 2 points to minus 47 on October, just up from the lowest level since records started in 1974.
“Mortgage rates and rents, and energy price uncertainty after the winter, are significant cost concerns that will play on the minds of many consumers over the coming months,” said Linda Ellett, UK head of retail and leisure consumer markets at KPMG. — Bloomberg
