UK retail sales fell much faster than expected in September, as experts warned the combination of unseasonably hot weather and high interest rates may have pushed the high street back into recession.
Sales were down by 0.9%, after a 0.4% rise in August, the ONS revealed today. Economists had expected a dip of just 0.3%.
The ONS said retailers blamed the weather as non-food sales were down by 1.9%, with shoppers reluctant to buy the latest Autumn/Winter fashion lines in 30-degree heat. But higher interest rates played a part too, slowing consumer demand.
Alex Kerr, assistant economist at Capital Economics, said the numbers suggest the UK retail sector is now “back in recession”, having declined for back-to-back quarters.
The high street's woes could continue into the crucial Christmas period. Today GfK revealed its Consumer Confidence Index fell by nine points to -30 for October, the lowest reading since July.
Phil Monkhouse, head of sales at financial services firm Ebury, said: “Lingering economic uncertainty is likely to have seen households shy away from big ticket, luxury items too providing another headwind to sales. Consumers are likely to reminded of the historically sky-high cost of energy as we head towards heating season which will further dent confidence.
“It creates a painfully uncertain environment for retailers as we hurtle towards Black Friday, the festive period and the January sales. Those who are able to retain quick access to capital, robust hedging arrangements to counter any fluctuations in currency and have built up decent levels of stock are likely to thrive in this shaky landscape.”
Erin Brookes, European Retail and Consumer Lead at Alvarez & Marsal, said: "Unseasonably warm weather saw lower-than-average sales of autumn and winter wares in September, as Brits continue to bask in the late summer sun and held off making purchases for the new season. However, there are bright spots emerging. We are starting to see the Bank of England’s rate rises take effect, with inflation falling and consumer confidence improving, which should feed through to sales in the coming months.”
The negative impact of the warm weather on retail sales in September comes after July retail sales were held back by unseasonably wet weather.
