Retail sales plummeted last month, marking a sharp turnaround from the steady growth seen since the Brexit vote.
According to new figures from the Office for National Statistics (ONS), retail sales volumes fell 0.8 per month-on-month, dropping from August’s growth of one per cent.
On a year-on-year basis sales volumes rose 1.6 per cent excluding fuel, while sales value rose 4.6 per cent. This is down from a 2.8 and 5.8 per cent rise in August respectively.
Following August’s relative surge, the ONS’ predictions of a 2.3 per cent rise in September were way off.
Despite this, the ONS has said that an underlying pattern of growth continued, as the sales in the most recent three months saw a 0.9 per cent growth excluding fuel.
The latest figures comes against the backdrop of further inflation, with prices across all store types seeing their highest year-on-year growth since 2012.
“September’s sales showed little evidence of consumers seriously shifting their shopping behaviour in response to the squeeze on spending power; with sales up in volume and value terms on last year,” British Retail Consortium head of retail insight Rachel Lund said.
“Clothing and footwear retailers were the biggest beneficiaries, as the back-to-school shop coincided with the onset of Autumn. Price increases are still absorbing the lion’s share of growth in spending, with growth in food sales in September almost entirely down to inflation.
“However, it is true that things remain challenging for the retail industry. Rising costs are eating into margins, prices rises are absorbing the pounds in shoppers wallets, while the simple economics underpinning current spending behaviour aren’t sustainable: household earnings are falling in real terms, consumer borrowing is at levels only seen in the lead up to the last financial crisis and it cannot continue for ever.”
Deloitte’s head of retail Ian Geddes added: “Against a well-documented backdrop of rising inflation, increasing levels of debt and fragile consumer confidence, the retail industry will have been looking forward to entering the final three months of the year – typically a crucial trading period that encompasses both Black Friday and the Christmas shopping periods.
“However, the prospect of the Bank of England raising interest rates for the first time in over 10 years next month could come at a challenging time for the retail sector.
“Issues around consumer finances, spending power and rising cost pressures are already challenging the industry: an interest rate rise could cause an additional headache for retailers in the lead-up to Christmas.”