Fall in retail sales pushes sector to worst month since the pandemic
The UK’s retailers saw their sales levels unexpectedly drop last month, pushing them to the lowest since February 2021 when there were still COVID-19 restrictions in place, official data suggested.
The Office for National Statistics (ONS) said that retail sales volumes dipped 0.3% in October. The statisticians also revised September’s fall from 0.9% to 1.1%.
Analysts had expected a rise of 0.4% in October, according to a consensus estimate supplied by Pantheon Macroeconomics.
Retail sales fell 0.3% in October 2023, following a fall of 1.1% in September.
When we look more broadly, sales fell 1.1% in the three months to October when compared with the previous three months.
— Office for National Statistics (ONS) (@ONS) November 17, 2023
Food shops said their sales had decreased 0.3% during the month, a worse result than September, but non-food stores saw a decline of 0.2% in October, after sales dropped 2.1% the month before.
Retailers blamed the cost-of-living, reduced footfall and wet weather in the second half of October.
Heather Bovill, Deputy Director for Surveys & Economic Indicators at the ONS, said: “Retail sales fell again in October to their lowest level since February 2021 when widespread lockdown restrictions were in place. After rebounding in September, fuel sales dipped with increasing prices discouraging customers, while food sales also dropped as consumers prioritised essential goods.
“It was another poor month for household goods and clothes stores with these retailers reporting that cost-of-living pressures, reduced footfall and poor weather hit them hard. However, it was a better month for online retailers, the only main sector to report growth in October.”
The ONS said that while volumes – the amount that was sold – dropped during the month, the value of what was sold increased by 0.1%. It means that in October people were paying 16.9% more to buy 3.1% less than they did in February 2020, laying bare the impact of the cost-of-living crisis.
Earlier this month, a survey from the ONS showed that the rising cost-of-living has caused around two-thirds (67%) of adults in Great Britain to spend less on non-essentials.
Aled Patchett, Head of Retail & Consumer Goods at Lloyds Bank, said: “Another dip in sales suggests rising household costs remain at the forefront of consumers’ minds, despite headline inflation easing in recent months.
“The rising cost of living remains a drag on consumers’ discretionary incomes. Households continue to prioritise essential spending, particularly as falling winter temperatures push energy use up and high levels of inflation prevent material downturns in the prices of goods.
“Retailers will now be looking to strike the balance of getting staffing levels right while also being mindful that an early sales offering might not get the tills ringing as loudly as they’d like, as consumers navigate financial challenges elsewhere.”