UK retail sales fall in September despite panic fuel purchases – .

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UK retail sales fall in September despite panic fuel purchases – .


  • Retail sales volumes down 0.2% in September
  • Data highlights conundrum of weak demand and high inflation for the BoE
  • Retail sales are now 1.3% lower than a year ago
  • Rising inflation darkens outlook for household spending
  • Supply chain issues lead to empty store shelves

LONDON, Oct.22 (Reuters) – UK retail sales unexpectedly fell for a fifth consecutive month last month, despite a rush of motorists filling their cars with fuel, adding to signs that Britain’s economic recovery is faltering .

Sales volumes fell 0.2% in September, according to official figures released on Friday, as supply chain issues led to gaps on store shelves. It was the longest string of consecutive monthly declines since the series began in 1996 and beat economists’ expectations in a Reuters poll for a 0.5% increase.

This softness adds to the conundrum the Bank of England faces as to whether to counter the rapid rise in inflation by raising interest rates next month, or rather wait until the economy is reclaiming more ground lost due to the pandemic.

“Overall, the data supports our view that the economic recovery came to a halt in September,” said Bethany Beckett, UK economist at Capital Economics.

Retail sales rebounded strongly in the first part of the year as foreclosure restrictions were first relaxed for stores. But they have fallen steadily since a peak in April, in part because people spent more vacations and dining out after social distancing restrictions were loosened more generally.

In the three months to September, sales fell 3.9%, which the Office for National Statistics said would reduce economic growth in the third quarter by 0.2 percentage points.

Compared to before the pandemic, sales volumes are 4.2% higher, but they are 1.3% lower than they were a year ago.

EMPTY SHELVES

Supply chain bottlenecks led to gaps in some supermarket shelves, and many gas stations ran out of fuel in late September and early October, as a shortage of tanker drivers resulted in queues. waiting for cars trying to refuel.

“Labor shortages in supply chains, in farms, factories, warehouses and truck drivers, all threaten to derail this recovery,” warned the chief executive of the British Retail Consortium, Helen Dickinson, after the data.

Gasoline sales in September exceeded pre-pandemic levels for the first time, but there was a sharp decline in sales of household items such as furniture and lighting, the ONS said.

Consumer price inflation is also accelerating sharply, largely due to rising energy prices, and the BoE expects it to exceed 4% by the end of this year, or double of its target level.

A narrower measure of inflation used in retail sales data reached 3.7% in September, its highest level since December 2011.

The prospect of higher prices – as well as a more recent surge in COVID-19 cases – has cooled consumer moods. GfK reported earlier on Friday that its long-running sentiment survey showed the lowest morale since February, when Britain was still stranded. Read more

Retailers also face a dilemma of how to pass cost increases on to consumers. Discount chain Poundland and online fashion retailer Boohoo (BOOH.L) have both warned of declining profit margins in recent weeks. Read more

The BRC said three in five retailers expect prices to increase before Christmas.

Another online fashion retailer, ASOS (ASOS.L), parted ways with its chief executive last week over concerns that supply chain pressures and consumers revert to pre-pandemic behavior will only cut profits by 40% next year. Read more

Data from the ONS on Friday showed online spending remained strong overall, at 28% of total retail sales in September, up from 20% before the pandemic. But it is well below its peak of 37% in January when street stores were closed during the lockdown.

Reporting by David Milliken and Andy Bruce; Editing by Hugh Lawson

Our Standards: The Thomson Reuters Trust Principles.

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