UK retail sales posted a weaker than expected rebound in October, underlining the cost-of-living crisis draining consumer spending power.
Excluding fuel sales, the volume of goods sold in shops and online rose 0.3 per cent after a 1.5 per cent drop in September, when stores were closed for the funeral of Queen Elizabeth II, the Office for National Statistics said on Friday. Economists had forecast a 0.6 per cent gain.
Sales including auto fuel rose 0.6 per cent after a 1.5 per cent drop the month before. That was close to economists outlook for a 0.5 per cent increase.
The rebound may prove short lived, however. With inflation in double digits, and taxes and interest rates rising, living standards are on course for the biggest drop on record, the government’s fiscal watchdog said on Thursday.
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“Looking at the broader picture, retail sales continue their downward trend seen since summer 2021 and are below where they were pre-pandemic, said Darren Morgan, director of economic statistics for the ONS.
Fuel sales jumped 3.3 per cent, but elsewhere the picture was mixed with food, household goods and business at department stores all declining. This was offset by higher sales of clothing as stores introduced new fashion lines. There was also an increase in online sales and of second-hand goods, particularly at auction houses.
Overall sales in October were 6.1 per cent lower than a year ago and down 2.4 per cent on a three-month basis. Soaring prices meant that consumers were spending more to buy the same basket of goods. The value of retail sales rose by 1.8 per cent in October, triple the increase in volumes.
In a bleak assessment of the economic outlook, the Office for Budget Responsibility on Thursday warned the economy is already in a recession that will last for more than a year and drive up unemployment.
The figures chime with figures showing UK consumer confidence ticked higher for a second month after prime minister Rishi Sunak worked to stabilise the economy following the disastrous and short tenure of his predecessor, Liz Truss.
The market research firm GfK said its measure of sentiment rose three points to minus 44 in November, leaving it near the record low of minus 49 recorded in September when Truss’s plan to slash taxes triggered panic in financial markets.
“This month’s fillip is likely to reflect nothing more than a collective sigh of relief as a new prime minister takes charge following the alarming fiscal antics we saw in September, said Joe Staton, client strategy director at GfK. “External factors have changed little. More bad news is inevitable.”
Confidence is well below levels of a year ago, reflecting a jump in food and energy prices that’s squeezing living standards and driving the economy into recession. GfK said consumers remain under pressure from rising interest rates, taxes and rent payments.-- Bloomberg
