Retail sales volumes fell by 0.8% in September, according to data released this morning by the Office for National Statistics.
The year-on-year trend is still positive however, with sales volumes this September exceeding September 2016 by 1.2%. The value of retail sales rose by 4.4% year on year reflecting rising prices.
Economists had expected a fall back in the rate of annual retail sales growth, but not to this extent.
Non-food sales volumes were the main culprit for September’s fall, showing a 0.6% month on month fall. Non-store retailing sales (i.e. mainly online and mail order) rose 0.2% over the month.
The pound fell by around 0.5% against the dollar on the back of the news.
Laith Khalaf, Senior Analyst at Hargreaves Lansdown said: “September’s retail sales figures show some evidence of belt tightening, with discretionary spending taking a particularly big hit, as shoppers prioritise more essential items as prices rise. This has given the pound a bit of a bloody nose on the currency markets, with investors scaling back their expectations of a rate rise from the Bank of England.
“Despite the drop in retail sales, it would be unwise to peg a consumer slowdown on one month’s figures alone, which can be affected by random events like the weather, or a big sporting event on the telly.
“Taking a longer term view the UK consumer has actually been relatively resilient to rising inflation and weak wage growth, and retail sales volumes are still ahead of where they were last year despite these headwinds.”