Dip in retail figures worse than expected

Weakening consumer confidence was laid bare today after new figures revealed a much worse than expected October for retailers.

Retail sales volumes dropped 0.8% month-on-month in October, in contrast to a 0.6% boost the previous month, as consumers tightened their spending.

The drop announced by the Office for National Statistics (ONS) was much more pronounced than the 0.2% fall predicted by experts.

The boost from shoppers buying warmer clothing and back-to-school attire which helped to boost September figures proved shortlived as clothes and shoes volumes fell 2.3%.

It comes after a challenging year for the retail sector which has seen a number of high-profile brands go into administration, most recently electricals retailer Comet.

Today's figures represent the worst drop in monthly sales volumes since April and mirror the findings of a British Retail Consortium survey last week.

Its director general Stephen Robertson said: "This is a really dispiriting result so close to Christmas. September's slight upturn in sales offered retailers mild cause for cheer, but it was frustratingly short-lived."

The result will also fuel concerns about the UK's recovery after Bank of England governor Sir Mervyn King said yesterday that output may shrink again in the final three months of this year.

Samuel Tombs, UK economist at Capital Economics, said: "Looking ahead, the renewed pick-up in inflation and signs that the resilience of employment is starting to fade do not provide a positive backdrop for spending in the run-up to Christmas."

While shoppers appeared to have stayed away from high streets and shopping centres, today's report shows more people have been buying online.

The shift by many retailers, particularly clothes shops, towards an online offering was reflected in a 1.3% increase in non-store retail sales volumes between September and October.

The ONS estimated the proportion of internet sales increased by 0.5% between September and October with the average weekly spend online at £562 million.

Food shops saw a 0.6% drop in volumes, while department stores reported a 0.7% fall with household goods volumes dropping 0.5%.

The figures presented an even bleaker picture than the latest British Retail Consortium findings which showed sales were 0.1% lower on a like-for-like basis than a year ago.

PA