British retail sales experienced an unexpected decline in October, marking the first drop since May as consumer caution intensified in the run-up to the government's Budget announcement.
Official Figures Reveal Surprise Slump
The Office for National Statistics reported that retail sales volumes fell by 1.1% during October, following an upwardly revised increase of 0.7% in September. This contraction defied economists' expectations, with most having forecast unchanged month-on-month figures.
Grant Fitzner, chief economist at the ONS, highlighted the broad nature of the decline: "Supermarkets, clothing stores and online retailers all saw slower sales, with feedback from some retailers that consumers were waiting for November's Black Friday deals."
Budget Uncertainty Weighs on Shoppers
The figures align with warnings from major retailers, including high street stalwart Marks & Spencer, that shopper spending was pulling back due to uncertainty surrounding the upcoming Budget. Separate data from GfK showed consumer confidence has fallen across all measures this month, with the public "bracing for difficult news" in next week's fiscal announcement.
Rob Wood, chief UK economist at Pantheon Macroeconomics, commented: "The increasingly chaotic run-up to the Budget has begun to weigh on consumer spending, judging by confidence nudging down in November and weakening retail sales growth lately."
Multiple Factors Driving the Decline
The ONS identified several contributing factors to October's poor performance. Supermarket sales dropped for the second consecutive month, while monthly online sales fell by 1.7% - the first decline since January. Retailers reported that spending was being held back as consumers awaited this month's Black Friday promotions.
Despite October's setback, the three-month picture showed some resilience, with retail sales up 1.1% compared with the previous three months as gains in August and September offset last month's decline.
Looking ahead, economists anticipate a potential recovery. Mr Wood suggested: "We expect retail sales volumes growth to remain subdued in November as pre-Budget speculation reaches a fever pitch. We still think consumers should return to the high street when the Budget is passed and there is a little more clarity over fiscal policy." He also noted that a possible Bank of England interest rate cut could spur on festive shoppers towards the year's end.
