Retail sales figures for October have shown a decline, with analysts attributing the dip to consumer caution and uncertainty surrounding the forthcoming Budget announcement.
According to data released by the Office for National Statistics, retail sales volumes experienced a decrease of 0.7% in October. This followed a slight rise of 0.1% in September, highlighting the impact of ongoing economic concerns on consumer behaviour. Despite this monthly decline, over a broader period of three months leading up to October, sales volumes have actually increased by 0.8% when compared to the three months prior.
Food stores also saw a downturn in October, with volume sales falling by 0.6%. Yet, this was a notable improvement compared to September’s 1.9% decrease, indicating a complex picture where specific sectors face varying challenges. The decline in food store volume was mirrored online with a 0.4% dip, contrasting sharply with a 1.4% rise in the previous month.
Across the entire retail sector, online spending in October dropped by 1.2%. However, when juxtaposed with the same period last year, there was a 5% increase, suggesting that while short-term uncertainties affect spending, online retail continues to see growth compared to previous years.
Kris Hamer, Director of Insight at the British Retail Consortium, commented on the situation, noting that despite a positive start to the ‘golden quarter’ with consistent year-on-year growth for the fourth consecutive month, consumer anxiety about the Budget led to a monthly dip. Hamer highlighted impending costs that retailers will face in 2025, including substantial changes to Employers’ National Insurance contributions and new packaging taxes. These will exacerbate existing financial pressures, potentially leading to job losses and store closures.
In a recent warning to the Chancellor, major UK retailers, including well-known supermarket chains, have expressed concern over the planned increase in Employers’ National Insurance contributions. They argue that such measures could result in unavoidable job cuts and price increases, underlining the precarious nature of the current retail environment.
The retail sector in the UK is navigating a complex landscape marked by consumer uncertainty and looming financial challenges. As businesses and consumers await further developments, the industry’s resilience and adaptability will be critical in the coming months.
