- U.K. Retail Sales Drop 0.3% in First Annual Fall Since 2013
Sluggish wage growth and rising consumer prices in the U.K. continued to hurt retail sales in October.
The retail sales fell by 0.3 percent year-on-year in October, according to the Office for National Statistics. The first yearly decline since March 2013.
On a monthly basis, sales rose 0.3 percent in October, meaning the underlying price pressures were likely one of growth. However, this increase failed to offset the revised 0.7 percent decline recorded in September.
The high food prices, which were 3.5 percent higher than what was obtained a year ago, pushed the volume of goods sold in October down by 0.3 percent.
Food prices were 3.5 percent higher than a year earlier. This, analysts attributed to rising input costs and weak pound value. Meaning, growing Brexit uncertainties amid rising consumer prices is hurting consumer sentiment and future outlook.
Samuel Tombs, the chief UK economist at Pantheon Macroeconomics, said: “Retail sales volumes recovered only partially from September’s 0.7% month-on-month drop, underlining that consumers have adopted a cautious mindset.”
“Admittedly, surveys had pointed to a further fall in sales in October, but sales of motor fuel and at ‘other’ stores – which the surveys cover poorly – jumped by 2.0% and 3.1% respectively. The rise in motor fuel sales likely will be reversed immediately in November, as pump prices respond to the recent surge in oil prices,” he said.
Inflation rate remains unchanged at 3 percent in October, while wage growth climbed slightly by 0.2 percent to 2.2 percent. Still, the pace of increase is below inflation rate and if not curtail it will further hurt consumer spending and retail sales.
The pound rebounded slightly ahead of the US tax vote to trade at $1.3192 against the US dollar.