The high street spending boom that has propped up the UK economy throughout the global slowdown stalled in October, as retail sales saw their first monthly decline in 18 months.
The high street spending boom that has propped up the UK economy throughout the global slowdown stalled in October, as retail sales saw their first monthly decline in 18 months. While the figures were worse than expected, analysts put the fall down to unseasonably warm weather rather than a drastic collapse in consumer confidence in the wake of the 11 September terrorist attacks.
National Statistics said retail sales volumes slid 0.1 per cent last month against September levels, with shoppers deferring purchases of winter clothing as temperatures soared 2.5 degrees celsius above the seasonal average. Forecasters had hoped for a 0.1 per cent rise in what was the first set of retail data to cover a full month since the terrorist attacks on the US.
The overall decline was exacerbated by an upward revision of 0.1 per cent made to September's figures, which saw last month's rise restated at 0.3 per cent.
However, on an annual basis, the picture remained strong. Volumes were up by 5.7 per cent, just short of September's 5.9 per cent growth rate. On a three-month comparison, sales were up 1.3 per cent in line with trend.
Demand is booming in some areas. Sales of household goods grew at 0.8 per cent during October – their fastest pace since April 1998 – under the influence of the housing boom. Annually,household good sales were up by 10.4 per cent.
The City was sceptical that the data would push the Bank of England's Monetary Policy Committee to make further cuts to interest rates in the near term.
Simon Rubinsohn, an economist at Gerrard, said: "None of this implies that the consumer is about to throw in the towel and push the economy into recession. The MPC is unlikely to lower base rates any further in December but could take further action in the early part of the new year if there are signs of a pronounced deterioration in consumer confidence."
David Hillier, an economist at Barclays Capital, said: "Given that the weather has now turned very cold, clothing volumes are highly likely to have bounced back in November. That suggests October's out-turn is largely erratic, rather than the start of a downward trend in sales volumes."
John Butler, UK economist at HSBC, said it was too early to argue that the reported decline reflected a sharp loss of consumer confidence. "The bad news for consumers is now coming through in the form of rising unemployment, but this will only dampen rather than halt consumer spending," he said.
US data released earlier this week showed retail sales climbing by 7.1 per cent during October, the strongest monthly rise on record, following a surge in new car transactions.Reuse content