UK economy: Retail sales crash as cost of living crunch continues to bite
Retail sales volumes fell by 0.9 per cent in September as the month proved to be another wash out for the sector – with fears the slump could reflect a wider slowdown in the economy.
According to the latest reading from the Office for National Statistics (ONS), total non-food sales volumes in department and clothing stores dipped by 1.9 per cent, following a slight rise of 0.3 per cent the prior month.
The wider economy remains almost flat, with monthly GDP growth of 0.2 per cent in August. The economy contracted by 0.6 per cent, month on month, in July.
Household goods store sales volumes reported a monthly fall of 2.3 per cent because of falls in furniture and lighting stores, as consumers continued to put off buying big ticket items amid the cost of living crisis.
Jewellery and watch sellers were also impacted by a slowdown in spending, reporting a two per cent fall.
Despite food inflation falling to its lowest level since the summer of last year, shoppers still spent less at the till in September as pressures across the economy continued to bite.
The ONS said that volumes on groceries fell 0.2 per cent following a rise of 1.4 per cent in August.
“Looking at the quarterly picture, sales volumes fell by 1.3 per cent in the three months to September 2023 when compared with the previous three months,” the government body said.
Aled Patchett, head of retail and consumer goods at Lloyds Bank, said:“Falling sales suggest that, despite inflation waning on essentials like food, consumers remain cautious with their monthly household budgets.
“However, our latest UK Sector Tracker shows that in September, prices charged by food and drink manufacturers fell at the fastest rate in more than three years. This could help foster greater spending habits (across the economy) and lead to further cost drops being passed through to consumers.”
He added: “Retailers are acutely aware consumers continue to prioritise their spending away from branded and big ticket purchases. Despite that, a slowing rate of food price inflation should influence shoppers’ decision making.
“Those eager to boost sales in the final months of the year will be hoping a combination of falling inflation and a flurry of discounts are enough to fuel consumer spending.”