UK retail sales fell more than expected amid pre-budget anxiety

UK RETAIL sales fell more than expected in October as consumers held back on spending ahead of the Labour government’s first budget. 

The volume of goods sold in stores and online declined 0.7 per cent month on month, the Office for National Statistics said on Friday (Nov 22). Economists surveyed by Bloomberg had expected sales to drop 0.3 per cent, compared with a 0.3 per cent increase in September. 

“Retail sales fell back in October following three months of growth,” ONS senior statistician Hannah Finselbach said. “The fall was driven by a notably poor month for clothing stores, but retailers across the board reported consumers held back on spending ahead of the Budget.”

The figures provide fresh evidence that Chancellor of the Exchequer Rachel Reeves’ warnings of tax rises and spending cuts to fix public services overshadowed improving real incomes, easing borrowing costs and cooler inflation. The worry is that increased household caution could put an artificial limit on consumption, which accounts for two-thirds of GDP.

The actual sales data contrasted with a slight improvement in sentiment as measured by GfK’s consumer confidence gauge. GfK attributed the uptick to relief over anxiety about the budget, but noted that the measure remained well-below levels seen in August, when Prime Minister Keir Starmer warned of “painful” spending decisions. BLOOMBERG