British retail sales dropped significantly in October, showing more weakness than expected, according to the Office for National Statistics (ONS). This downturn adds to signs of slowing economic momentum ahead of Prime Minister Keir Starmer’s first budget announcement on October 30.
A Reuters poll of economists had predicted a 0.3% monthly drop in sales volumes from September. However, the actual decline was the steepest since June, with sales falling by 1.0% compared to May. The ONS also revised September’s sales growth to just 0.1%, down from the previously reported 0.3%.
Sterling briefly dropped by about a fifth of a cent against the U.S. dollar after the data release before recovering.
“Retailers across the board reported that consumers held back on spending ahead of the new government’s first tax and spending budget,” the ONS noted.
Another factor potentially contributing to the decline was the school half-term holidays for England and Wales. Typically included in October’s reporting period, they fell outside of it this year. Warmer-than-usual weather was also cited as a reason for weak clothing sales, echoing trends reported by the British Retail Consortium.
Year-on-year, sales volumes rose by 2.4% in the 12 months to October, slowing from September’s 3.2% growth and falling short of the 3.4% increase forecasted by economists in the Reuters poll.
