United Kingdom retail sales sink in September, reversing August gains

United Kingdom retail sales sink in September, reversing August gains

United Kingdom retail sales sink in September, reversing August gains

Inflation in the United Kingdom has risen to its highest level in five years, squeezing the spending power of households but giving a boost to pensioners who will enjoy an increase in their state income.

Rachel Lund, head of retail insight and analytics at the British Retail Consortium, said: "September's sales showed little evidence of consumers seriously shifting their shopping behaviour in response to the squeeze on spending power; with sales up in volume and value terms on previous year".

Retail sales are expected to make nearly no contribution to quarterly economic growth in the July-September period, government statisticians said.

Store prices, meanwhile, continued to rise across all store types and were at their highest year-on-year price growth since March 2012 at 3.3%. The ONS said that 17% of sales took place online during the month.

That means that retail sales will have had a positive impact overall on third quarter economic growth figures, which are due for release next week.

"We will find out in the coming months whether this is consumers holding off on purchases in preparation for Christmas, or whether the Bank of England's messaging on interest rate rises has been enough to keep some hands in pockets".


"Despite the drop in retail sales, it would be unwise to peg a consumer slowdown on one month's figures alone, which can be affected by random events like the weather, or a big sporting event on the telly".

Compared to past year, sales were up only 1.2%, nearly half the expected 2.1% and down from a revised 2.3% for the previous month.

To this end, Thiru has asked those responsible for Bank of England to "resist temptation to increase interest rates, at present at 0.25%, especially during this period of great political uncertainty".

Bank governor Mark Carney has said rates could go up in the "relatively near term", with many analysts expecting a hike in November.

With real income growth in negative territory, he said the outlook for consumers will remain highly challenging over the final months of 2017 but should gradually improve as 2018 progresses.

Average wages are rising by 2.1 per cent, according to the figures for July.

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