British retail sales grew more than expected in October, rebounding after an extra bank holiday in September that kept stores closed, but were below pre-pandemic levels, reflecting the impact of higher prices.
The volume of retail sales in Great Britain grew by 0.6 percent last month compared to the previous month, according to data published by the Office for National Statistics on Friday.
That was double the 0.3 percent increase expected by economists polled by Reuters and followed a revised decline of 1.5 percent in September, when sales were hit by an additional bank holiday for Queen Elizabeth’s funeral.
However, sales volumes fell 2.4 percent in the three months through October from the previous quarter, reflecting a hit to household financing from higher inflation.
Darren Morgan, director of economic statistics at the Office for National Statistics, said October’s rise was likely the impact of a rebound after weak sales last month as many retailers closed or worked differently on the extra bank holiday for the Queen’s funeral.
“Looking at the broader picture, retail sales continue their downward trend seen since summer 2021 and are below where they were before the pandemic,” he added.
In October, the amount of goods sold was 0.6 percent lower than February 2020 levels, before the onset of the coronavirus pandemic, although shoppers spent 14.2 percent more, revealing the impact of inflation on household purchasing power.
The consumer price index hit a 41-year high of 11.1 percent in October, according to the Office for National Statistics on Wednesday.
The increase in retail sales in October could be replicated across the services sector, said Martin Beck, chief economic adviser to EY ITEM Club, the forecasting house, noting “decent” economic growth in the month.
Separate data published on Friday by research firm GfK showed that UK consumer confidence rose marginally to -44 in November, up from a 48-year low of -49 in September.
But Joe Staton, director of client strategy at GfK, said the rally “is likely to reflect nothing more than a collective sigh of relief” as Rishi Sunak enters Downing Street in the wake of market turmoil sparked by Liz Truss’ ill-fated “mini” budget in September. .
He added that household balance sheets remained “shrouded in huge uncertainty with new jumps in food prices, energy still uncomfortably expensive, the prospect of higher new interest rates putting pressure on mortgage and rent payments, potential future increases in council tax, and shrinking real wages.” “.
The figures come the day after the Office for Budget Responsibility said UK living standards would suffer their biggest drop in more than six decades in 2022-23.
The independent financial watchdog, which published its forecasts alongside the government’s autumn statement, calculated that a decline in household disposable income over the next two years would wipe out the growth of the past eight years.
Farah Thalji, director of global advisory firm Simon-Kucher & Partners, said retailers will have a “tough road ahead in 2023” as the sector faces its “most challenging period since the 2008-2009 economic downturn”.
Friday’s retail sales numbers provide a little relief to businesses ahead of the busiest shopping season of the year, with Black Friday next week and Christmas next month.
The difficult economic climate means there will be “not much to cheer about this Christmas for supermarkets as well as high street retailers,” said Phil Moncus, head of sales at Ibery, the global financial services group.