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UK retail sales hit by mild autumn | UK retail sales hit by mild autumn |
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Retail sales fell by a worse-than-expected 0.5% in October, after a mild autumn hit sales of winter clothes. | Retail sales fell by a worse-than-expected 0.5% in October, after a mild autumn hit sales of winter clothes. |
Sales at household goods stores also fell 3% following a particularly strong August and September, the Office for National Statistics (ONS) said. | |
For the three months to October, retail sales rose 0.4% - a considerable slowdown from the 2.3% increase recorded for the three months to July. | For the three months to October, retail sales rose 0.4% - a considerable slowdown from the 2.3% increase recorded for the three months to July. |
Analysts said October's fall suggested shoppers were cutting back spending. | Analysts said October's fall suggested shoppers were cutting back spending. |
Samuel Tombs at Pantheon Macroeconomics said the drop was the "first real sign that consumers are tightening their purse strings due to uncertainty about Brexit". | Samuel Tombs at Pantheon Macroeconomics said the drop was the "first real sign that consumers are tightening their purse strings due to uncertainty about Brexit". |
Non-food sales fell 1.3%, with a 1% decline in clothing sales, which he said could not be blamed on the weather. | Non-food sales fell 1.3%, with a 1% decline in clothing sales, which he said could not be blamed on the weather. |
"Consumers' confidence already has weakened in recent months due to concerns about the economic outlook and we doubt households are feeling any surer that a no-deal Brexit will be avoided after this week's political turbulence," Mr Tombs said. | "Consumers' confidence already has weakened in recent months due to concerns about the economic outlook and we doubt households are feeling any surer that a no-deal Brexit will be avoided after this week's political turbulence," Mr Tombs said. |
"Unless the government miraculously manages to force the current withdrawal agreement through parliament soon, growth in consumers' spending will weaken markedly in the fourth quarter." | "Unless the government miraculously manages to force the current withdrawal agreement through parliament soon, growth in consumers' spending will weaken markedly in the fourth quarter." |
Are spending patterns changing? | |
Thomas Pugh at Capital Economics said some of October's weakness may reflect consumers delaying spending ahead of "Black Friday" discounting this month. | |
"High oil prices also weighed on the volume of fuel sold. As such, we suspect that there could be a rebound in sales volumes in November as oil prices have fallen sharply and if Black Friday sales pick up," he added. | "High oil prices also weighed on the volume of fuel sold. As such, we suspect that there could be a rebound in sales volumes in November as oil prices have fallen sharply and if Black Friday sales pick up," he added. |
What does it mean for retailers? | |
The Christmas quarter accounts for a big proportion of profits for most retailers and is set to be very tough. | |
Ian Geddes, head of retail at Deloitte, said more than half of consumers do their Christmas shopping in November or earlier. | |
"Given consumers' appetite to rein in their spending, the promotions on and around Black Friday will likely be more of a draw than ever," he said. | |
"We expect this year's Black Friday to generate record levels of UK spending, which will likely boost November's retail figures overall. Whether it will be enough to make this a 'golden' quarter remains to be seen." | |
What else is happening in the UK economy? | |
Earlier this week the ONS said inflation was steady at 2.4% last month, despite expectations of a modest rise. | |
Prices of food and clothing fell, but utility bills and petrol prices were up, said the ONS. | |
Separate ONS figures suggested that the squeeze on consumers' wallets is easing slightly, as wage growth outstrips inflation. | |
In the three months to September, wages excluding bonuses rose by 3.2% compared with a year earlier - the biggest rise since the end of 2008. |