UK retail sales slide again in October in new blow for economy

LONDON, Nov 17 (Reuters) – British retail sales volumes fell unexpectedly in October as consumer finances remain stretched, official data showed on Friday, in a new warning sign for the economy.
Retail sales volumes dropped 0.3% month-on-month, following a revised 1.1% decline in September that was worse than first estimated, the Office for National Statistics (ONS) said.
Economists polled by Reuters had forecast that sales volumes would rise by 0.3% on the month in October.
Overall the figures fitted with the darkening outlook for Britain’s economy, with economic growth stagnant and strong price pressures fading only slowly.
Investors think these factors will force the Bank of England to lower interest rates next year.
“Retailers suggested that cost of living, reduced footfall and the wet weather in the second half of the month contributed to the fall,” the ONS said.
Excluding petrol, sales volumes fell 0.1% fall on the month. The figures also showed a downward revision for sales during the third quarter.
[1/4]People shop on Oxford Street in London, Britain April 10, 2023. REUTERS/Anna Gordon/File Photo Acquire Licensing Rights
“We remain of the view that a winter recession looks likely, as higher interest rates gradually feed through and take their toll on household and business finances,” said Sandra Horsfield, economist from Investec bank.
“That said, we also continue to expect the downturn to be mild as a moderation in inflation should help support real purchasing power.”
Given the fine margin by which Britain avoided an economic contraction during the third quarter, Friday’s figures showed a risk that GDP could yet be revised lower to a negative reading.
Compared with last year, retail sales were 2.7% lower – a worse outcome than any of the economists polled by Reuters had forecast.
Retail sales volumes fell to their lowest level since early 2021 and are now no higher than they were five years ago.
Still, retailers hope the crucial Christmas trading period will yield better times.
Despite recent downbeat economic data and consumer surveys, major retailers including Tesco (TSCO.L), Sainsbury’s (SBRY.L), Next (NXT.L), Primark (ABF.L) and Marks & Spencer (MKS.L) have sounded confident about their prospects in the run-up to Christmas.
Additonal reporting by James Davey Editing by William James, Mark Potter and Elaine Hardcastle
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