Shock drop in retail sales as shoppers tighten purse strings

CITY economists today blamed Brexit uncertainty for another fall in retail sales last month when nervous shoppers stayed away from high streets.

Retail sales unexpectedly dropped for a second month in succession in October, falling 0.5 per cent compared with City forecasts of a 0.2 per cent rise.

Analysts had been pencilling in an improvement on September because of the increase in real wages over recent months. Samuel Tombs, chief UK economist at forecasters Pantheon Macroeconomics, said in a tweet: “October’s fall in retail sales is the first sign that consumers are tightening purse strings due to Brexit uncertainty. Trend should be improving, given [rising] real wages. Weather not to blame. Possibly a Black Friday impact.”

Shops selling household goods were hit the hardest, with a three per cent fall in sales, followed by clothing and footwear retailers, where sales edged down one per cent. In contrast, online sales increased to 18 per cent of the total, up from 17.7 per cent the previous month, according to the data from the Office for National Statistics (ONS). Ian Geddes, head of retail at Deloitte, said: “Consumers, concerned about their levels of disposable income and debt, are being cautious about how they spend their money. This is creating a highly competitive environment for retailers, who are faced with what looks set to be a very tough final quarter of 2018.

“While notwithstanding the fact that consumers have a history of surprising the market at Christmas, there is little reason to feel overly positive about the short-term outlook.”

The latest gloomy figures come at a time of meltdown on the high street with stores struggling to survive a “perfect storm” of setbacks including competition from online retailers and soaring rates and rents.

Fashion retailers have also not been helped by a mild October which slowed sales of heavy winter coats and jumpers. Rhian Murphy, head of retail sales at ONS, added: “Consumers chose to purchase goods from many stores’ websites as online sales continued to increase.

“Retail sales slowed after a buoyant summer with the mild autumn hitting winter clothes sales.”