Retail sales fall despite trend of steady growth

UK RETAIL sales dropped sharply in September despite an underlying trend of steady growth in the face of rising prices, figures show.

There was an unexpectedly sharp fall of 0.8 per cent last month, reversing a surge in August, according to the Office for National Statistics (ONS).

The quantity bought in Britain’s retail sector rose 1.2 per cent in September from the same month in 2016, down from 2.3 per cent growth in the year to August and well below the expected 2.3 per cent, ONS data showed.

However, the ONS said the underlying retail pattern was one of growth, with the three-month measure showing sales were up 0.6 per cent.

Monthly figures showed sales fell 0.8 per cent, with non-food stores having the most impact on the drop.

ONS senior statistician Kate Davies said: “September’s retail sales saw a monthly decline of 0.8 per cent, reversing August’s growth. However, there is a continuation of the underlying trend of steady growth in sales volumes following a weak start to the year, and a background of generally rising prices.

“These increased costs are reflected in the more rapid growth in the amount spent when compared with the quantity bought.”

Store prices continue to rise across all store types and are at their highest yearon-year price growth since March 2012 at 3.3 per cent, the ONS said. Online sales values increased year-on-year by 14 per cent, accounting for approximately 17 per cent of all retail spending.

Ian Gilmartin, head of retail and wholesale at Barclays Corporate Banking, said: “It’s important to avoid overstating the negatives in September’s retail sales, as retailers did manage to post year-on-year growth despite the range of headwinds they are battling currently.

“However, sales were down compared to a month earlier, with the expected dip following August’s strong result worse than predicted.”

Ian Geddes, head of retail at Deloitte, said: “Issues around consumer finances and spending power are already challenging the industry. An interest rate rise could cause an additional headache for retailers in the lead-up to Christmas.”