Retail Sales Plummet to the Lowest Level Since the 2021 Lockdowns

18 Nov, 2023

Retail Sales Plummet to the Lowest Level Since the 2021 Lockdowns

In a surprising downturn, UK retail sales for October contracted by 0.3%, marking the lowest volume since February 2021, during Covid lockdowns. Contrary to expectations of growth, this decline coincides with recent data revealing stagnant UK economic growth. The gross domestic product (GDP) showed no expansion between July and September, and the Bank of England anticipates subdued growth until 2025.

The Office for National Statistics (ONS) highlighted that petrol and diesel sales were likely affected by increasing fuel prices. Demand for various goods also saw a decline. Heather Bovill, Deputy Director at the ONS, noted, "It was another poor month for household goods and clothes stores with these retailers reporting that cost of living pressures, reduced footfall and poor weather hit them hard."

Storm Babet, bringing exceptional rainfall in October, impacted the UK, further affecting retail sectors. Fuel sales dropped by 2%, with consumers spending cautiously and adverse weather influencing shopping habits. Specialist stores like butchers and bakers experienced a decline, while alcohol and tobacco sales fell by 4.2% and 10.4%, respectively.

Retailers observed a trend where consumers prioritized essential items and opted for cheaper products. As the retail sector enters the crucial Christmas trading period, industry experts, like Lisa Hooker from PwC, anticipate a potential last-minute surge in spending in December.

Compared to October last year, retail sales volumes witnessed a 2.7% decrease. The ONS also revised down its initial September retail sales estimate to a 1.1% decline.

Recent inflation figures showed a notable drop to 4.6% in the year to October from 6.7%. This decline follows a series of interest rate hikes by the Bank of England. Rising household costs continue to impact consumer spending decisions, with households prioritizing essential expenses amidst the ongoing challenges of the cost of living.