UK retail sales fell for the first time in three months in October as consumers cut back on spending ahead of Labor's first budget in 14 years.
The Office for National Statistics (ONS) announced that October sales fell 0.7% on the previous month, and revised down September's growth rate from 0.3% to just 0.1%. Clothing stores were particularly affected last month as consumers tightened their wallet strings.
Prime Minister Rachel Reeves warned people to prepare for tax increases in her October 30 budget, but businesses were particularly hard hit. Retailers said the increase in national insurance rates for employers would increase costs by £7bn.
On a quarterly basis, which is a better indicator of underlying trends than single-month figures, ONS said volumes rose 0.8% in the three months to the end of October compared to the previous quarter. Ta. Volumes rose 2.4% in the year to October 2024.
ONS senior statistician Hannah Finselbach said: “Retail sales fell back in October after three months of growth.” “The drop was due to a particularly slow month for clothing stores, but retailers across the board reported that consumers brought forward their budgets and cut back on spending. ”
Sales at clothing and footwear stores fell 3.1% in October, the biggest decline of all categories, while sales at other non-food stores fell 1.4%.
The ONS said clothing sales growth in recent months was driven by end-of-season sales and good weather encouraging consumers to shop.
Non-food stores (combining department stores, clothing, household goods, and other non-food retail stores) decreased by 1.4%. Sales at supermarkets and grocery stores fell by 0.6%.
The pound hit a six-month low against the US dollar after overall retail sales fell short of expectations. The pound fell to $1.255, its lowest level since May 14, extending recent losses on growing economic concerns.
“Lower sales in October does not bode well for the retail industry, as this month typically marks the start of the festive season,” said Greg Zakowitz, senior e-commerce expert at Omnisend. “Retailers large and small will be looking at today's numbers and hoping this isn't a harbinger of things to come. ”
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Sales increased only by 0.1% for household goods and 0.6% for fuel.
Asif Aziz, retail director at mobile phone company EE, suggested discount sales events and upcoming Christmas spending may also have held back spending.
“October was a quiet month in downtown areas, with shoppers clearly keeping their makeup dry ahead of Black Friday sales,” he said. “Uncertainty around the budget will also encourage a save now, spend tomorrow mentality as consumers begin to factor in increased spending in the run-up to Christmas.”
