UK retail sales ‘lacklustre’ but still growing

While UK retail sales registered a monthly increase of 0.3% between September and October, annually they dropped 0.3% according to the Office for National Statistics (ONS).

However, while the year-on-year drop was the first annual decline of sales since March 2013, it did beat analyst expectations of a 0.6% fall. On a quarterly basis, sales increased 0.9% in the three months to October, compared with the previous three months.

“We are continuing to see an underlying picture of steady growth in retail sales, although this October suffered in comparison with a very strong October in 2016,” said Kate Davies, a senior statistician at the ONS.

“Growth month-on-month in October was particularly strong in the second-hand goods sector, which includes auction houses and antique dealers,” she added.

Ben Brettell, a senior economist at Hargreaves Lansdown, said while at first glance the numbers look weak, they are not actually as bad as they look.

“We’ve been waiting for the pay squeeze to filter through to the high street, and at first glance today’s numbers aren’t good news on that front,” he said.

However, noting the underlying growth from the three month numbers, and that making an annual comparison with a very strong October last year is “tough”, he added the sales are not as bad as they look.

“As ever with retail, the Christmas period, which kicks off with Black Friday on 24 November, will be crucial,” Brettell said.

“The Bank of England says household consumption growth will slow from 1.5% to 1% in real terms next year, but that business investment and exports should pick up the slack in terms of aggregate demand. The overall picture remains lacklustre, but not disastrous.”

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