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Retail sales at lowest level since 2021 COVID lockdowns

todayNovember 17, 2023

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Retail sales at lowest level since 2021 COVID lockdowns

Retail sales took an unexpected fall last month, according to official figures suggesting a slump to COVID lockdown levels with only online operators seeing growth.

The Office for National Statistics (ONS) reported a 0.3% decline overall in October 2023, following a fall of 1.1% in September.

A rise in volumes of 0.3% had been expected by economists.

Sales fell 1.1% in the three months to October when compared with the previous three months, the ONS added.

Its deputy director for surveys and economic indicators, Heather Bovill, 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.”

Their volumes were 0.8% higher on the previous month, the data showed.

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Of the rest, the sharpest decline, of 2%, was felt by fuel retailers.

Households still have good reason to be cautious given the squeeze on their finances from energy, food, mortgages and rents.

Consumer spending accounts for 60% of the UK economy and any declines will make worrying reading for those concerned that the UK economy is at risk of recession – that’s two consecutive quarters of negative growth.

Zero growth for the third quarter of the year, in an initial reading, remains at risk of being revised down.

But there are economists and industry experts who believe that consumers are not widely in bad shape and many have been saving up to allow for greater spending during the festive season.

Pantheon Macroeconomics said of the data: “The further fall in retail sales in October, which left sales 3.9% below their 2022 average level, likely will be reversed in the coming months, due to robust growth in households’ real disposable incomes.”

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The first test of that theory will be Black Friday, which could deliver a boost to growth prospects in the current fourth quarter.

Deann Evans, managing director for Europe at ecommerce platform Shopify, said: “Retailers can be forgiven for anticipating a difficult holiday shopping season, with the latest ONS figures showing a continued slowdown in British retail sales.

“But our data suggests that many shoppers have used recent months tactically to save in preparation for the holiday season.

“In fact, over half (53%) of UK shoppers have been putting aside more money each month than they have in previous years.”

Written by: Newsroom

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