UK retail spending fell last month at the fastest pace for any October since 2008 as consumers curbed purchases of non-food goods in the face of rising inflation, a survey showed on Tuesday.
Retail sales values slid by an annual 1.0 per cent on a like-for-like basis, which strips out changes in store size, the British Retail Consortium (BRC) said, compared with a 1.9 per cent rise in September.
Another survey from payments company Barclaycard also showed weak consumer spending, with a similar split between spending on essentials at the cost of spending on discretionary items.
Last week, the Bank of England raised interest rates for the first time in more than 10 years.
Most economists polled by Reuters before the decision thought a hike would be a mistake in part because of the fragile state of consumer finances, pressured by the rise in inflation since last year’s Brexit vote.
The BRC said its figures were a cause for concern ahead of the Christmas holidays. “The decline was driven by the worst performance of non-food sales since our record began in January 2011,” said Helen Dickinson, BRC chief executive.
“The growth in food sales meanwhile, adds some colour to this otherwise anemic picture, but these figures are very much buoyed by inflation.”
Consumer price inflation hit 3 per cent in September, its highest level in more than five years and above the BoE’s 2 per cent target.
The BRC, whose figures are not seasonally adjusted, said total sales last month edged up 0.2 per cent, which was also the weakest increase for any October since 2008.
Dickinson said the last week’s rate hike - the first in more than a decade - would add more pressure on household budgets.
Barclaycard’s measure of consumer spending growth eased to 2.4 per cent year-on-year, compared with an increase of 3 per cent in September.
“In light of the Bank of England’s announcement last week, it’ll be interesting to see how shoppers, who have so far demonstrated their resilience, continue to juggle the many demands on their budget,” said Paul Lockstone, managing director at Barclaycard.
Reuters
