UK retail sales outperform expectations ahead of second lockdown
UK retail sales rose for the sixth consecutive month, smashing analysts’ expectations as Britons stocked up on goods ahead of new restrictions.
In October UK retail sales volumes grew 1.2 per cent, well ahead of the 0.0 per cent expected, said the Office for National Statistics. Volumes are now 6.7 per cent higher than in February 2020.
The year-on-year growth rate in the volume of retail sales increased 5.8 per cent, with research suggesting consumers took advantage of cut-price deals and starting their Christmas shopping earlier.
Retail sales have recovered somewhat since non-essential stores were allowed to reopen in June, but the reintroduction of a second lockdown will likely knock consumer spending.
The increase was driven by a 6.4 per cent month-on-month rise in non-store sales as consumers hunkered down in the face of a second wave.
Household goods jumped 3.2 per cent amid a trend of home improvement, while food store sales dipped 0.2 per cent month-on-month but were still 3.5 per cent above the pre-pandemic level in February.
Clothing stores and fuel were the only sectors still below their pre-lockdown sales.
Retail fuel sales are yet to make a full recovery from the falls in March and April because of a reduction in road traffic. Sales remained 8.8 per cent below February’s figures.
All sectors saw strong growth for online sales when compared with the pre-pandemic level, in contrast ot the little or negative growth seen in stores.
But analysts and economists have warned that this could be the last month of growth in retail sales volumes as the economic recovery stalls in the face of new restrictions.
“It is likely to be a last hurrah before we see an even sharper slide in the November numbers, a month from now,” warned Michael Hewson, chief market analyst at CMC Markets. “One thing seems certain, Q4 is likely to see a sharp slowdown from the resilience that we saw in Q3.”
Samuel Tombs, chief UK economist at Pantheon Macroeconomics, warned of a staggering rise next month. “Looking ahead, the second “lockdown” has prompted us to pencil-in a 10 per cent month-to-month decline in retail sales volumes in November, which would leave them 4 per cent below their pre-Covid level.”
“Retail sales likely will set a new peak in December, if as we expect, non-essential shops are allowed to reopen at the beginning of the month,” he added.