UK retail sales fall 0.4% in September as households cut back
Retail sales volumes in Great Britain dropped 0.4% month on month in September, the Office for National Statistics said, a much steeper decline than economists' expected 0.1% fall.
UK retail sales fall 0.4% in September as households cut back
Online sales drive the decline
Non-store retailing, which is predominantly online sales, led the way down with a 2.2% monthly drop, the sharpest fall of any part of the retail sector. The ONS linked the weakness to poor online sales of autumn and winter wear during an unseasonably warm September.
Other sectors also struggled:
- Textile, clothing and footwear stores: volumes down 0.9%
- Household goods retailers: a 0.5% slump
- Supermarkets: 0.4% lower, partly because of poor sales of clothing ranges due to the weather
Department stores were the only sector besides automotive fuel to grow, with volumes up 0.2%.
Fuel defies record pump prices
Motor fuel bucked the trend: volumes sold rose 2.2% month on month even as pump prices hit record highs. In value terms fuel sales climbed 6.1%, the largest month-on-month increase since the 10.9% recorded in March, the month after the start of the US-Iran conflict. Stripping out fuel, the UK retail sales fall was 0.7% in September, worse than the City's 0.1% forecast.
Confidence and quarterly picture
The weak month lands amid falling sentiment: consumer confidence in the UK has dropped at the fastest rate since the Covid pandemic. The ONS also revised August's rise up from 0.5% to 0.7%, and sales grew 0.7% over the three months to the end of September compared with the previous quarter.
"Growth led by motor fuel, which, despite recent price increases at the pump, have now returned to monthly sales levels last seen before"
That is how Hannah Finselbach, senior statistician at the ONS, described the quarterly trend, noting that pump prices are back to levels seen before the Middle East conflict began. She added that food and drink sales contributed to growth, helped by warm weather and the World Cup, though they slipped back slightly in September.
Tougher times ahead of the festive period
Paul Dales, chief UK economist at Capital Economics, said the data shows "times are getting tougher for households just as the all-important festive period for retailers is just around the corner". He added that it supports the view that both real consumer spending and real GDP will grind to a halt in the final quarter of this year and the first quarter of next. The figures arrive days before chancellor John Healey announces his budget next week.
