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| Retail sales sluggish in September, official figures show Retail sales sluggish in September, official figures show | |
| (2 months later) | |
| Retail sales were weaker than expected in September as shoppers were put off by higher clothing prices and exceptionally warm weather. | Retail sales were weaker than expected in September as shoppers were put off by higher clothing prices and exceptionally warm weather. |
| Sales on UK high streets were flat for a second consecutive month, according to the Office for National Statistics, which also revised up its initial estimate of a 0.2% drop in August. | Sales on UK high streets were flat for a second consecutive month, according to the Office for National Statistics, which also revised up its initial estimate of a 0.2% drop in August. |
| Economists had expected sales to rise by 0.4% last month. | Economists had expected sales to rise by 0.4% last month. |
| Despite the weaker-than-expected performance, Kate Davies, a senior statistician at the ONS, said the broader backdrop for retail sales was positive following the vote to leave the European Union on 23 June. | Despite the weaker-than-expected performance, Kate Davies, a senior statistician at the ONS, said the broader backdrop for retail sales was positive following the vote to leave the European Union on 23 June. |
| “Retail sales in September 2016 were unchanged from August 2016. However, the underlying trend is one of strength, suggesting consumer confidence has remained steady since June’s referendum,” she said. | “Retail sales in September 2016 were unchanged from August 2016. However, the underlying trend is one of strength, suggesting consumer confidence has remained steady since June’s referendum,” she said. |
| “There was some variation between store types, clothing stores saw a fall in the quantity bought in part due to rising prices and a warmer than average September.” | “There was some variation between store types, clothing stores saw a fall in the quantity bought in part due to rising prices and a warmer than average September.” |
| In the third quarter, retail sales grew at the fastest rate in almost two years, up 1.8% compared with the second. It was the strongest three-month performance since the final quarter of 2014. | In the third quarter, retail sales grew at the fastest rate in almost two years, up 1.8% compared with the second. It was the strongest three-month performance since the final quarter of 2014. |
| Economists said the figures suggested the retail sector made a positive contribution to economic growth in the third quarter, boosting hopes there was no sharp slowdown following 0.7% growth in the second quarter. The ONS will publish the first estimate of third-quarter growth on 27 October. | Economists said the figures suggested the retail sector made a positive contribution to economic growth in the third quarter, boosting hopes there was no sharp slowdown following 0.7% growth in the second quarter. The ONS will publish the first estimate of third-quarter growth on 27 October. |
| Looking further ahead Martin Beck, from the forecasting group EY Item Club, said strength in the third quarter could represent a “last hurrah” for the high street, as customers face the prospect of higher prices triggered by the drop in the pound since the Brexit vote. | Looking further ahead Martin Beck, from the forecasting group EY Item Club, said strength in the third quarter could represent a “last hurrah” for the high street, as customers face the prospect of higher prices triggered by the drop in the pound since the Brexit vote. |
| “Inflation is now likely to pick up sharply, as the impact of the depreciation in the value of sterling steadily passes through to consumer prices,” he said. | “Inflation is now likely to pick up sharply, as the impact of the depreciation in the value of sterling steadily passes through to consumer prices,” he said. |
| “The degree to which retailers pass on rising import costs remains to be seen, but there is certainly a sense that the strong third-quarter figures for retail sales volumes are likely to represent a last hurrah for the high street, with a more challenging period to come for retailers and consumers alike.” | “The degree to which retailers pass on rising import costs remains to be seen, but there is certainly a sense that the strong third-quarter figures for retail sales volumes are likely to represent a last hurrah for the high street, with a more challenging period to come for retailers and consumers alike.” |
| In September, clothing sales fell by 2.8%, following a 3% drop in August. Food sales fell 0.2%, while sales of household goods and those at department stores rose. | In September, clothing sales fell by 2.8%, following a 3% drop in August. Food sales fell 0.2%, while sales of household goods and those at department stores rose. |
| The annual rate of sales growth slowed to 4.1% last month from 6.6% in August. | The annual rate of sales growth slowed to 4.1% last month from 6.6% in August. |
| Consumer finances are expected to come under greater pressure in the coming months, as inflation rises and firms delay hiring decisions and limit wage rises amid uncertainty over Britain’s exit from the EU. | Consumer finances are expected to come under greater pressure in the coming months, as inflation rises and firms delay hiring decisions and limit wage rises amid uncertainty over Britain’s exit from the EU. |
| Capital Economics predicts household spending will slow to about 1.5% in 2017 from 2.7% this year. | Capital Economics predicts household spending will slow to about 1.5% in 2017 from 2.7% this year. |
| Ruth Gregory, the UK economist at the consultancy, said some of the negative effects for consumers would be offset by low interest rates and an easing of fiscal austerity that is widely expected when Philip Hammond delivers his maiden autumn statement on 23 November. | Ruth Gregory, the UK economist at the consultancy, said some of the negative effects for consumers would be offset by low interest rates and an easing of fiscal austerity that is widely expected when Philip Hammond delivers his maiden autumn statement on 23 November. |