British retail sales grew more than expected in October, rebounding after an extra bank holiday in September kept stores shut, but were below pre-pandemic levels, reflecting the impact of surging prices.
The volume of retail sales in Great Britain grew 0.6 per cent last month compared with the previous month, according to data published by the Office for National Statistics on Friday.
That was double the 0.3 per cent rise forecast by economists polled by Reuters and followed a revised down 1.5 per cent fall in September, when sales were affected by the additional bank holiday for Queen Elizabeth’s funeral.
However, sales volumes fell 2.4 per cent in the three months to October compared with the previous quarter, reflecting the hit to household finances from high inflation.
Darren Morgan, ONS director of economic statistics, said October’s rise was “likely a rebound effect after weak sales last month as many retailers closed or operated differently on the extra bank holiday for the Queen’s funeral”.
“Looking at the broader picture, retail sales continue their downward trend seen since summer 2021 and are below where they were pre-pandemic,” he added.
In October, the quantity of goods sold was 0.6 per cent below February 2020 levels, before the onset of the coronavirus pandemic, even though shoppers spent 14.2 per cent more, laying bare inflation’s impact on household spending power.
The consumer price index rate hit a 41-year high of 11.1 per cent in October, according to the ONS on Wednesday.
Martin Beck, chief economic adviser to the EY ITEM Club, a forecasting house, said October’s boost in retail sales could be replicated across the service sector, pointing to “decent” economic growth in the month.
Separate data published on Friday by research company GfK showed that UK consumer confidence rose marginally to minus 44 in November, up from a 48-year low of minus 49 in September.
But Joe Staton, client strategy director at GfK, said the uptick was “likely to reflect nothing more than a collective sigh of relief” as Rishi Sunak entered Downing Street following the market turmoil sparked by Liz Truss’s ill-fated “mini” Budget in September.
He added that household budgets remained “shrouded in massive uncertainty with fresh jumps in food prices, energy still uncomfortably expensive, the prospect of new interest rate rises pressurising mortgage and rent payments, potential future hikes in council tax and squeezed real pay”.
The figures come the day after the Office for Budget Responsibility said UK living standards would suffer their largest fall in more than six decades in 2022-23.
The independent fiscal watchdog, which published its forecast alongside the government’s Autumn Statement, calculated that the drop in household disposable income over the next two years would wipe out the past eight years’ growth.
Farah Thalji, director at global consultancy Simon-Kucher & Partners, said retailers would “have a rough road ahead going into 2023” as the sector faced its “most challenging period since the economic downturn of 2008-2009”.
Friday’s retail sales figures provide little relief for businesses ahead of the busiest shopping season of the year, with Black Friday next week and Christmas next month.
Phil Monkhouse, head of sales at global financial services group Ebury, said the difficult economic climate meant there would “be little to cheer this Christmas for the supermarkets as well as the high street retailers”.