Retail sales ease as summer splurge comes to an end
A bumper summer of consumer spending came to an end with lower retail sales than expected last month, with UK food sales suffering their biggest fall for nearly three years.
The Office for National Statistics said overall retail sales were down 0.8% in September month-on-month. Within that, food stores reported a 1.5% fall, the largest decline since October 2015. Year-on-year sales were ahead 3%.
The summer months saw a spike in spending, as consumers made the most of the football World Cup and heatwave, stocking up on food and items such as televisions and barbeques.
Analysts had been expecting a correction in September, but the drop was larger than most had pencilled in.
Ben Brettell, senior economist at Hargreaves Lansdown, said: “The monthly data is notoriously volatile, but the year-on-year figures of 3% undershot forecasts of a 3.6% rise, and September’s drop dragged the three-month number down, the third fall in a row.
“It looks like consumer spending peaked in early summer and has been declining ever since.
“Where we go from here is uncertain. Brexit is hitting consumer confidence hard, but on the plus side wage growth has hit a decade high while inflation is falling. So consumers look likely to have more spending power. The issue is whether they choose to use it or keep their powder dry until [there is] more clarity [on] Brexit.”
David Cheetham, chief market analyst at XTB, said: “The reading for September marks a disappointing end to the period. We’ve had three data points from the UK in the last three days with only the unemployment figures providing any real support for the pound.”
In the three months to September, retail sales were ahead 1.2%. The largest contributor to that was strong growth in watches and jewellery stores, said the ONS.
Online sales as a proportion of all retailing fell slightly, to 17.8% against 18% in August. Food stores and clothing stores reported record proportions of internet retail, at 5.8% and 18.2% respectively.
Rhian Murphy, head of retail sales at the ONS, said: “Retail continued to grow in the three months to September, with jewellery shops and online stores seeing particularly strong sales. This was despite a stark slowdown in food sales in September, following a bumper summer.”