UK retail sales drop unexpectedly as shoppers await Black Friday and budget | Retail industry

Sales at UK retailers unexpectedly fell last month as shoppers awaited Black Friday deals and uncertainty over the upcoming budget hit consumer confidence.

Retail sales fell 1.1% month-on-month in October, their first fall since May, according to official figures from the Office for National Statistics (ONS). Economists expected sales growth to remain flat from the previous month.

Supermarkets, clothing stores and online mail order companies have experienced sales declines, according to the ONS; Some retailers said this was because consumers were delaying purchases ahead of the annual Black Friday sales.

Clothing, footwear and textile stores recorded a 3.3% month-on-month sales decline following a strong summer season when shoppers were motivated to buy warm-weather clothes and sporting events lifted consumers’ moods; This was the biggest drop.

Supermarkets recorded a 1.1% sales decline in October; This was the second consecutive monthly decline.

Online retail sales fell 1.7% month-on-month, while fuel sales fell 2.4% in October compared to September.

Some analysts also attributed the surprise drop in sales in October to consumer concerns about the budget Prime Minister Rachel Reeves will announce next week.

“Uncertainty about what the Chancellor’s budget next week will mean for individuals is only further weakening consumer confidence and spending intentions,” said Rajeev Shaunak, head of consumer at accountancy and consultancy firm MHA.

“The Christmas trading period will be critical and early sales indicators are expected to confirm consumer demand remains weak, creating a perfect storm for retailers.”

On Friday, research firm GfK published data showing that consumer confidence fell across all measures of the index this month.

The GFK’s five sub-indices record public opinion about people’s personal finances, their propensity to make major purchases and the general economic situation in the UK.

The company recorded declines in all five sub-indices compared to October, resulting in overall confidence falling two points to -19.

The most recent monthly survey, dating back to 1974, showed particular anxiety among workers on salaries between £35,000 and £49,999, with significant declines in their expectations of their own finances and future spending.

“This is a dismal set of results as we head towards next week’s budget,” said Neil Bellamy, director of consumer analytics at GfK. “With little to raise expectations in the current environment, the public is bracing for difficult news.”

The ONS revised September retail sales from 0.5% to 0.7%, but said the August growth rate had been revised from 0.6% to 0.5%.

Overall, retail sales were down 3.3% from pre-pandemic levels through February 2020.