UK Shoppers Pull Back Spending Ahead of Fiscal Announcement
Retail sales across the United Kingdom experienced an unexpected decline during October, marking the first contraction since May. The surprise drop has been widely attributed to growing consumer caution in the lead-up to the government's Budget announcement.
Official Figures Reveal Surprise Contraction
According to data released by the Office for National Statistics (ONS), the volume of retail sales fell by 1.1% in October. This followed a stronger-than-initially-reported performance in September, which was upwardly revised to a 0.7% increase. The decline caught most economists off guard, as they had forecast that sales would remain unchanged from the previous month.
Despite the monthly setback, the broader picture over a three-month period showed more resilience. The ONS reported that retail sales grew by 1.1% in the three months to October compared with the previous quarter.
Budget Uncertainty and Black Friday Delay Spending
The figures align with reports from a range of retailers, including high street stalwart Marks & Spencer, which indicated that shopper spending had retreated due to uncertainty surrounding the upcoming Budget.
This sentiment was echoed in a separate consumer confidence survey from GfK, released on Friday 21 November. The survey found that public confidence had fallen across all measures this month, with the public reportedly “bracing for difficult news” in the following week's Budget.
ONS chief economist Grant Fitzner provided further insight, noting that retailers reported some spending was being held back in anticipation of November's Black Friday promotions. “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,” Fitzner stated.
The combination of fiscal caution and strategic shopping behaviour created a perfect storm, leading to the unforeseen dip in October's retail performance.
