Retail sales have fallen – again. This should come as no surprise as people braced for the budget cuts, job losses, and uncertain economy. It is unlikely that consumer confidence will change, but Holiday sales may give retail a boost.
Retail sales volumes fell 0.2 per cent in September. August numbers were revised to a lower 0.7 per cent from the previously reported 0.5 per cent according to the Office for National Statistics. Clothing and shoe shops suffered a 0.8 per cent fall, mail order and internet sales were down 0.5per cent and food stores reported a rise of just 0.1 per cent.
Howard Archer at HIS Global Insight said: “The second successive fall in retail sales in September is surprising and particularly worrying given the importance of consumer spending to the economy. Indeed, it can only fuel fears that the recovery is faltering markedly and it increases pressure on the Bank of England to revive quantitative easing in addition to keeping interest rates down at 0.5% for an extended period.”
The fall of retail sales for two months in a row last occurred the end of 2009 in December and then in January 2010. Holiday spending is just weeks from being underway and it is hopeful that consumers will boost the numbers for retail sales buying gifts and newly released electronics such as GoogleTV, computer pads, and mobile phones. Discounts are expected to be enticing to consumers as retailers compete for sales and this should bring more shoppers out as well.
“Earnings growth is not keeping pace with inflation and a double dip in the housing market has probably sapped confidence,” said Alan Clarke at BNP Paribas.
“Overall, a disappointing month again. In the context of the monetary policy committee, not so long ago the MPC minutes were optimistic on the outlook for the consumer. That must have suffered a setback given the retail sales data, contributing to another baby step closer to another round of QE.”