UK retail sales barely grow as food, clothing demand declines

LONDON

UK retail sales barely rose in October as food stores saw declines for a second month and clothing dropped the most this year.

Once fuel is stripped out, overall sales increased just 0.1 per cent from September, when they plunged 0.6 per cent, the Office for National Statistics said on Thursday. From a year earlier, they fell 0.3 per cent, the first decline in more than four years.

On a less-volatile three-month basis, there was a 1.4 per cent annual gain in sales, though that was weakest since June 2013.

The figures may add to concern about the health of the UK consumer in the build-up to the crucial Christmas shopping season. Faster inflation and sluggish wage growth have squeezed households this year, with a fallout on spending and overall economic growth.

Sales in October were led by household goods and items such as antiques and computers. Food sales were down 0.4 per cent and clothing and footwear dropped 1.5 per cent. There were also declines in internet and catalogue sales.

Including fuel, retail sales rose a better-than-forecast 0.3 per cent in October from September and fell 0.3 per cent year-on-year.

Stronger inflation has been largely driven by the pound’s decline since the Brexit vote in June 2016. That’s lifted import prices, and Ikea said this month that costs at its UK business jumped almost 14 per cent in the year through August.

Uncertainty about the outlook amid deadlocked Brexit talks between Britain and the European Union may also be making consumers more cautious. J Sainsbury Plc Chief Executive Officer Mike Coupe has warned of the negative consequences of the UK leaving the bloc without a trade arrangement.

While inflation hit 3 per cent last month, Bank of England Governor Mark Carney expects it to peak soon and ease in 2018. He’s also forecast a modest pickup in wage growth, which should ease the pressure on shoppers’ wallets.