UK retail sales growth slumps to weakest in four years

(iStock)
(iStock)

London - UK retail sales fell more than forecast in September, leaving growth in the third quarter at its weakest in four years.

Sales dropped 0.8% from August, far more than the 0.1% estimated in a Bloomberg survey. Over the third quarter, annual growth slowed to 1.5%, the worst performance since October 2013, according to data from the Office for National Statistics in London.

“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.”

In the three months through September, retail sales rose 0.6%, which means the sector probably made a minimal contribution - just 0.03 percentage point - to GDP.

The pound dropped after the data, falling 0.5% to $1.3140 as of 10:39. It’s depreciated almost 2% this month.

Britain’s retail industry has been under pressure this year, with the weaker pound boosting stores’ import costs and intense competition restricting price increases. At the same time, faster inflation has restrained consumer spending, and Sainsbury Plc and Tesco have both announced job cuts this year.

Food sales fell 0.6% on the month in September, while non-specialised stores - largely department stores - saw a 1.1% drop, the ONS said. There was a 6.7% fall in the category of “other stores.” Within that, the ONS cited a variety of big moves, including opticians, souvenirs, weapons and ammunition, and stamps and coins.

The data adds to policy makers’ picture of the economy as the Bank of England (BoE) approaches its first interest-rate increase in more than a decade. The majority of rate setters, including Governor Mark Carney, now believe policy will need to be tightened “in the coming months” as slack in the economy erodes.

Still, there have been some warnings that the economy isn’t ready for higher rates just yet. While inflation has accelerated to 3%, above the BoE’s target, wage growth remains sluggish and real pay is falling, weakening household spending power.

SUBSCRIBE FOR FREE UPDATE: Get Fin24's top morning business news and opinions in your inbox.

Read Fin24's top stories trending on Twitter:


ZAR/USD
17.29
(+0.21)
ZAR/GBP
22.72
(-0.09)
ZAR/EUR
20.55
(-0.25)
ZAR/AUD
12.46
(-0.08)
ZAR/JPY
0.16
(+0.13)
Gold
2038.63
(+0.47)
Silver
26.95
(+3.00)
Platinum
968.00
(+3.70)
Brent Crude
44.34
(+0.63)
Palladium
2174.99
(+2.19)
All Share
57629.36
(+2.45)
Top 40
53279.30
(+2.56)
Financial 15
9928.97
(+0.51)
Industrial 25
76162.43
(+1.63)
Resource 10
59790.27
(+4.30)
All JSE data delayed by at least 15 minutes morningstar logo
Company Snapshot
Voting Booth
Do you think it was a good idea for the government to approach the IMF for a $4.3 billion loan to fight Covid-19?
Please select an option Oops! Something went wrong, please try again later.
Results
Yes. We need the money.
11% - 877 votes
It depends on how the funds are used.
74% - 5798 votes
No. We should have gotten the loan elsewhere.
15% - 1163 votes
Vote