UK retail faced a larger-than-anticipated decline in September, with retail sales volumes dropping by 0.9 per cent, following a 0.4 per cent rise in August, according to the Office for National Statistics (ONS).
“It was a poor month for clothing stores as the warm autumnal conditions reduced sales of colder weather gear. However, September’s unseasonable warmth did help drive up food sales a little,” ONS Chief Economist Grant Fitzner said.
In the past month, Britain encountered one of its hottest Septembers on record, a phenomenon attributed to a widespread heatwave. This heatwave, as reported by clothing retailer H&M, adversely impacted sales across many parts of Europe.
Clothing stores experienced a poor month, with a 1.6 per cent fall in sales volumes, while household goods stores recorded a significant 2.3 per cent monthly drop, the largest this year. The ONS attributed these declines to ongoing cost-of-living pressures, reflecting the challenges faced by British households due to supply-chain difficulties, labour shortages post-COVID-19, and surging energy costs following geopolitical tensions.
The weak retail performance is expected to impact quarterly gross domestic product (GDP) growth by 0.04 percentage points, particularly concerning as the economy only grew by 0.2 per cent in the second quarter. Analysts are concerned that GDP may have stagnated or even contracted in the third quarter, reflecting the challenging economic landscape.
While the overall consumer price inflation in Britain stood at an annual 6.7 per cent in September, the highest among major advanced economies, consumers have been cautious about spending, especially on big-ticket items. A recent survey indicated a significant reluctance to splurge on Christmas spending, with nearly a third of Britons planning to cut back, primarily due to higher food and energy costs.
Despite these challenges, online commerce platform Shopify remains cautiously optimistic, noting that shoppers have been saving more than in the previous year, suggesting potential increased retail footfall both online and offline in the lead-up to Christmas.
