Retail sales hit lowest level since 2021 lockdowns – BBC News

By Dearbail JordanBusiness reporter, BBC News

17 November 2023

Image source, Getty Images

Shoppers bought less fuel and food in October as they were hit by rising living costs and poor weather, according to official figures.

The volume of products sold last month fell by 0.3% to the lowest level since February 2021 when large parts of the UK were in Covid lockdowns.

Retail sales had widely been forecast to grow in October.

The worse-than-expected data emerged as recent figures showed the UK economy was failing to grow.

Gross domestic product – the amount of the goods and services produced by the UK – flatlined between July and September and the Bank of England expects only subdued growth until 2025.

Commenting on the latest data, the Office for National Statistics said petrol and diesel sales may have been “affected by increasing fuel prices”.

Demand for other goods was also lower, said the ONS.

“It was another poor month for household goods and clothes stores with these retailers reporting that cost of living pressures, reduced footfall and poor weather hit them hard,” said Heather Bovill, deputy director for survey and economic indicators at the ONS.

During October, Storm Babet hit much of the UK resulting in “exceptional rainfall”, according to the Met Office.

Fuel sales fell by 2% between September and Octobers with retailers reporting that “consumers were spending their money more cautiously, alongside the impact of bad weather”.

Supermarkets said shoppers were buying more food, but specialist stores, such as butchers and bakers, recorded a decline. Sales of alcohol and tobacco also dropped, down 4.2% and 10.4%, respectively.

Retailers said shoppers “were buying cheaper products and prioritising important items”.

The retail sector is heading into its most important trading period which includes Christmas.

Lisa Hooker, leader of industry for consumer markets at PwC, said: “We know from earlier in the year that in tough times consumers prioritise special events and family occasions, so retailers will be hoping that consumers are keeping their powder dry for a last minute Christmas spending surge come December.”

Compared to last October, retail sales volumes were 2.7% lower.

The ONS also revised down its reading of retail sales in September to a drop of 1.1% after initially estimating a decline of 0.9%.

Recent figures showed that inflation – which measures the rate at which prices are rising – fell sharply to 4.6% in the year to October from 6.7%.It follows a long succession of interest rate rises by the Bank of England.

While raising rates can reduce inflation, it also affects economic growth by making it more expensive for consumers and businesses to borrow money.

Aled Patchett, head of retail and consumer goods at Lloyds Bank, said: “Another dip in sales suggests rising household costs remain at the forefront of consumers’ minds, despite headline inflation easing in recent months.

“The rising cost of living remains a drag on consumers’ discretionary incomes. Households continue to prioritise essential spending, particularly as falling winter temperatures push energy use up.”

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