Retail sales fall in Great Britain as households cut back

Retail sales in Great Britain dropped 0.4% in September, a steeper decline than the 0.1% economists had predicted. The Office for National Statistics (ONS) released the figures just days before the chancellor is due to announce the budget. Poor online sales of autumn and winter clothing, caused by unseasonably warm weather, contributed to the fall.

Sector breakdown and consumer confidence

Almost every retail sector saw a decline. Non-store retailing, which is mostly online, fell 2.2% month on month—the largest drop of any category. Textile, clothing and footwear stores were down 0.9%, household goods retailers slipped 0.5%, and supermarkets dipped 0.4%. Department stores were the only sector besides automotive fuel to record an increase, with a 0.2% rise.

But automotive fuel sales surged. The volume of fuel sold jumped 2.2% in September, returning to levels not seen since before the conflict in the Middle East began. In value terms, fuel sales rose 6.1%—the biggest monthly increase since March, which followed the start of the US-Iran conflict. Stripping out fuel, retail sales slumped 0.7%.

Consumer confidence in the UK has fallen at its fastest rate since the Covid pandemic. Paul Dales, chief UK economist at Capital Economics, said: “October’s sharp fall in consumer confidence and the dip in retail sales volumes in September show that times are getting tougher for households just as the all-important festive period for retailers is just around the corner.” Dales added that the fall in confidence makes the prime minister less likely to call an early election soon.

Hannah Finselbach, senior statistician at the ONS, noted that retail sales grew in the latest quarter, led by motor fuel. She said food and drink sales also contributed to quarterly growth, partly helped by warm weather and the World Cup, although they fell back slightly in September. The September drop followed a bumper August, with the ONS revising that month’s rise up from 0.5% to 0.7%. Quarterly sales increased 0.7% year on year.