In September, retail sales in the UK experienced a notable increase, challenging concerns over an economic slowdown.
- The Office for National Statistics (ONS) reported a surprising 0.3% rise in retail sales volumes for September.
- Economists had predicted a 0.4% decline, highlighting the unexpected strength in consumer spending.
- A substantial 5.5% growth occurred in ‘other non-food’ sectors, led by technology stores.
- Despite poor supermarket performance, overall quarterly retail growth is the highest since July 2021.
Retail sales in the UK rose by 0.3% in September, according to the Office for National Statistics (ONS), defying economists’ expectations of a decline. This upturn is indicative of resilient consumer spending habits in the face of looming economic uncertainties, particularly potential tax increases in the upcoming Budget.
The increase in retail sales was chiefly driven by a significant 5.5% growth in ‘other non-food’ stores, with tech and telecommunications sectors making notable contributions, likely spurred by back-to-school purchases. Although supermarket sales fell by 2.4%, attributed to adverse weather and ongoing reductions in consumer spending on luxury food items, the overall retail sector maintained its momentum.
Consumer sentiment surveys suggest cautiousness concerning future tax hikes, yet the current data reveals that spending patterns remain robust. According to Alex Kerr, a UK economist, this trend is expected to persist as households experience an improvement in real incomes, despite the potential fiscal challenges ahead.
The data from the ONS further shows a 1.9% retail growth in the quarter, matching a previous high in early 2021. This quarterly performance underscores a broad-based strength across all main retail sectors, marking a 2.6% year-on-year growth — the highest since March 2022. Neil Birrell, Chief Investment Officer at Premier Miton Investors, interpreted these figures as signs of an unexpectedly robust economy.
Despite uncertainties, UK retail sales demonstrate resilience with continued growth in September.
