UK Retail Sales Sees Another Drop In October, Posing New Economic Challenge

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British retail sales took an unexpected hit in October, signaling economic concerns as consumers opted to stay home, according to official data released on Friday.


Retail sales volumes declined by 0.3% month-on-month, following a revised 1.1% drop in September, revealed the Office for National Statistics (ONS), indicating a more severe downturn than initially estimated.


Economists polled by Reuters had anticipated a 0.3% increase in sales volumes for October.


The broader economic landscape in the UK is shadowed by stagnant growth and gradually receding price pressures. Investors anticipate these conditions will prompt the Bank of England to reduce interest rates in the coming year.


“Retailers cited factors such as the cost of living, reduced footfall, and unfavorable weather in the latter half of the month as contributors to the sales decline,” noted the ONS.


Excluding petrol, sales volumes experienced a 0.1% decrease on the month, with the figures revealing a downward revision for third-quarter sales.


“The impact of higher interest rates is becoming evident,” warned Martin Beck, chief economic adviser to the EY ITEM Club consultancy.


However, there may be some short-term relief for retailers. Beck suggested October’s decline in fuel sales could reverse as recent drops in oil prices lead to lower pump prices. 


Given the narrow margin by which Britain avoided an economic contraction in the third quarter, Friday’s figures raise the possibility of a negative GDP revision. Compared to the previous year, retail sales were down by 2.7%, surpassing the predictions of polled economists from Reuters.

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