- U.K. Retail Sales Dip to 4-Year Low Amid Rising Consumer Prices
U.K. retail sales declined more than expected in September as Brexit uncertainty and surging consumer prices eroded household income.
Sales declined by 0.8 percent in September, down from an increase of 0.9 percent in August, the Office for National Statistics reported on Thursday in London. On a yearly basis, sales slowed to 1.5 percent from more than 3 percent, making it the lowest sales since October 2013.
In the third quarter, retail sales climbed 0.6 percent, meaning the sector contributed about 0.03 percentage point to the GDP and the decline likely reflect the 3 percent rise in the inflation rate in the month.
“That is a disappointing end to the third quarter,” said Alan Clarke, an economist at Scotiabank in London. It’s “not great for the prospects for 25 October when we get that first estimate of third-quarter GDP.”
Inflation rate jumped to 3 percent in September, more than the 2.2 percent rate of wage growth. Higher prices and weak wage growth continued to erode consumers’ buying power since the June 2016 referendum.
However, while most experts expect the Bank of England to raise interest rates in November, new business investment in construction sector contracted for the third consecutive month in September and the economy expanded at a mere 0.3 percent. A higher borrowing cost will further impact new business investment and economic productivity.
This is one of the reasons, Mark Carney Governor of the Bank of England said economic slack remains a concern ahead of rates decision in November.
The pound remains in range, trading between $1.3227 to $1.3130 against the U.S dollar.