UK retail sales fell unexpectedly by 1.1% in October, marking the first decline since May. The drop defied economists' forecasts of flat growth and signals growing consumer caution ahead of Chancellor Rachel Reeves' Budget next week.
The Office for National Statistics (ONS) reported the month-on-month decline following a revised 0.7% increase in September. Across the three months to October, retail sales still lifted 1.1% compared with the previous quarter.
Clothing and footwear stores suffered the sharpest drop at 3.3%. Supermarkets saw sales fall 1.1% for the second consecutive month. Online retailers recorded a 1.7% decline, while fuel sales dropped 2.4% compared with September.
Black Friday delay
ONS chief economist Grant Fitzner said retailers reported shoppers holding back. "Supermarkets, clothing stores and online retailers all saw slower sales, with feedback from some retailers that consumers were waiting for November's Black Friday deals," he said.
Consumer confidence has fallen across all measures this month, according to separate figures from GfK released Friday. The research firm said the public is "bracing for difficult news" in next week's Budget.
Budget uncertainty
Rajeev Shaunak, head of consumer at the accountancy firm MHA, warned the Budget is dampening spending. "The uncertainty surrounding what the chancellor's budget next week will mean for individuals is only further dampening consumer confidence and spending intentions," he said.
He added that the Christmas trading period will prove critical. "The Christmas trading period will be critical, and early sales indicators are expected to confirm that consumer demand remains sluggish, creating a perfect storm for retailers."
Broader picture
Overall retail sales remain 3.3% below their pre-pandemic level from February 2020. Government borrowing reached £17.43 billion in October, the third-highest October level on record and above the £15 billion economists had forecast.
High street stalwart Marks & Spencer has been among retailers reporting that shopper spending pulled back due to Budget uncertainty.
Note: This article was created with Artificial Intelligence (AI).
