United Kingdom retail sales drop sharply

United Kingdom retail sales drop sharply

United Kingdom retail sales drop sharply

The good news is that year-on-year trend is still positive, with sales volumes this September exceeding September 2016 by 1.2%.

Annual shop price inflation rose to 3.3% in September, up from 3.1% in August and 2.7% in July to the highest level since March 2012.

The ONS reported a 0.8 per cent monthly decline in retail sales in September. Issues around consumer finances, spending power and rising cost pressures are already challenging the industry: "an interest rate rise could cause an additional headache for retailers in the lead up to Christmas".

"These increased costs are reflected in the more rapid growth in the amount spent when compared with the quantity bought".

"We have not seen three consecutive months of monthly retail sales growth since last autumn", said Andrew Sentance, former member of the Bank of England's Monetary Policy Committee and now a senior economic adviser at PwC.


Taking a longer term view, Khalaf said the United Kingdom consumer has actually been relatively resilient to rising inflation and weak wage growth, and retail sales volumes are still ahead of where they were previous year despite these headwinds. This was also weaker than the expected 2.1 percent.

Online sales values increased year-on-year by 14%, accounting for approximately 17% of all retail spending.

United Kingdom retail sales dropped sharply in September, according to the latest figures from the Office for National Statistics, causing the pound to sink against other currencies.

"This surge in inflation - which mainly reflects the fall in sterling since the EU Referendum vote - is squeezing consumers and holding back the growth of retail spending in volume terms". Rising costs are eating into margins, prices rises are absorbing the pounds in shoppers wallets, while the simple economics underpinning current spending behaviour aren't sustainable: "household earnings are falling in real terms, consumer borrowing is at levels only seen in the lead up to the last financial crisis and it can not continue forever".

Electricals saw sales come in 5.6% lower during the month - the sixth consecutive month of negative growth that the sector has seen, and its first in September since the index began.

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