Retail sales fall as shoppers delay spending ahead of Budget and Black Friday

"Sales volumes fell by 1.1%, the first contraction in three months and significantly worse than the flat reading economists had expected. The Office for National Statistics (ONS) said the drop was partly driven by shoppers intentionally holding off on spending until this month's major discount events. Grant Fitzner, ONS chief economist, said many consumers reported waiting for Black Friday deals, which begin next week."

"The fall reverses a 0.7% rise in retail volumes recorded in September - a figure revised up from 0.5%. Although sales rose 1.1% on a rolling three-month basis and were 0.4% higher than a year earlier, spending fell across almost every major category last month. Department stores were hit hardest, with sales down 4.5%, while clothing and footwear dropped 1.5%. Household goods fell 0.4%, and online sales declined 0.4%. Technology sales were the exception, boosted by the launch of the latest Apple iPhone."

"Economists warned that shoppers' caution reflects growing anxiety over the forthcoming Budget, amid speculation about higher taxes and the impact on disposable incomes. Rob Wood, chief UK economist at Pantheon Macroeconomics, said the "increasingly chaotic run-up to the Budget" had dented confidence. He argued that speculation over income tax rises likely weighed on households throughout October, with political turbulence in November expected to depress sentiment further."

Retail sales slipped by 1.1% in October, marking the first contraction in three months and falling short of economists' expectations. The decline was partly driven by consumers intentionally delaying purchases ahead of Black Friday and the Chancellor's Budget. Year-on-year and three-month rolling measures showed modest gains, but spending fell across almost every major category. Department stores suffered most, with a 4.5% drop; clothing and footwear fell 1.5%; household goods and online sales each declined 0.4%. Technology sales were the sole exception, buoyed by the launch of the latest Apple iPhone. Economists warned that Budget-related tax speculation has dented consumer confidence and could restrain festive spending.

Read at Business Matters