UK retail sales grew only moderately in October on weak food and clothing demand, the Office for National Statistics reported Thursday.
Retail sales increased 0.3 percent in October from September, but slightly faster than the expected 0.2 percent and reversed the 0.7 percent drop seen in September.
Stripping out fuel, sales volume grew 0.1 percent following a 0.6 percent drop in September. Economists had forecast sales to remain flat.
The decline was largely driven by a 0.4 percent drop in food store sales. At the same time, non-food store sales rebounded 0.8 percent in October.
Further, ONS data showed that retail sales logged its first annual fall in four years in October. Overall retail sales volume fell 0.3 percent, reversing a revised 1.3 percent rise in September. Sales were forecast to drop 0.5 percent.
Likewise, excluding auto fuel, retail sales dropped 0.3 percent in contrast to September's 1.6 percent increase. Economists had forecast a 0.4 percent decrease. This was also the first annual drop since March 2013.
"We are continuing to see an underlying picture of steady growth in retail sales, although this October suffered in comparison with a very strong October in 2016," Kate Davies, ONS senior statistician, said.
Month-on-month growth in October was particularly strong in the second-hand goods sector, which includes auction houses and antique dealers, Davies added.
The household spending squeeze may have passed its worst, and indeed headline inflation will trend downwards from here, James Smith, an ING economist, said.
But wage growth remains under pressure, and with jobs growth showing early signs of stalling, incomes may not accelerate as fast as the Bank of England is hoping in 2018, Smith noted.
That means, the economist said, consumers are likely to continue to take a cautious approach to spending for at least a couple more quarters.
Meanwhile, Britons are set to outspend rest of the Europe this Christmas and they mainly plan to splurge on gifts, a survey by the financial services firm Deloitte showed Thursday.
Deloitte's survey of 8,154 consumers across 10 European countries found that the UK's consumers expect to spend an average GBP 544 this Christmas, which is 38 percent more than the European average. Further, Britons are planning to do the majority of their festive season shopping in November.
The survey also showed that the UK is the the second highest spending market in Europe behind Spain and ahead of third place Italy.
by RTT Staff Writer
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