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UK retail sales volumes up by 7.4%

Shopping centre escalator shutterstock_367351241 725 x 500

Retail sales growth surged to a 14-year high last month, with spending lifted by the return of cold weather and Halloween.

The Office for National Statistics (ONS) said sales volumes were up 7.4% compared with a year earlier - the biggest rise since April 2002 - alongside the "strongest growth in internet sales seen for five years."

It recorded a 1.9% jump in October compared to September - almost double economists' estimates.

The ONS charted higher clothing sales as a result of autumnal conditions and a strong performance for supermarkets over the Halloween period amid continued deflation in the retail sector

It said average shop prices, including petrol stations, were 0.7% lower last month compared to October 2015. That was the slowest rate of price falls since July 2014 amid warnings of wider price increases to come.

While the data reinforces a continued desire among consumers to spend in the wake of the shock EU referendum result in June, economists fear spending being squeezed by higher inflation.

Retailers may be forced to pass on rising import costs - a result of the collapse in the value of the pound since June - to customers, potentially hitting the economy through weaker spending despite employment running at record levels currently.

Earlier this month, the Bank of England forecast the Consumer Prices Index measure of inflation could hit 2.7% in a year's time.

That is above the current rate of annual wage growth of 2.4%.

Howard Archer, chief UK and European economist at IHS Global Insight, described the retail numbers as "cracking ... even spooky," saying they would give retailers hope of a strong momentum towards the crucial Christmas period.

He said: "Even allowing for some helpful special factors, October's surge in retail sales indicates that consumers were still prepared to spend at the start of the fourth quarter, thereby buoying hopes that GDP growth can continue to hold up well."

Sterling - down almost 20% against the dollar since the Brexit vote - rallied by almost a cent above $1.25 when the ONS released the data.

It also gained back some ground against the euro.

Source : Sky News
http://news.sky.com/story/pound-jumps-as-retail-sales-growth-hits-14-year-high-in-october-10660239

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17 November 2016

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