Retail sales plunge to record low since implementation of 2021 lockdown measures

Official figures reveal that shoppers in the UK purchased less fuel and food in October due to increased living costs and poor weather conditions. The volume of products sold last month decreased by 0.3%, reaching the lowest level since February 2021 when the country was under Covid lockdowns. This decline in retail sales comes as recent data shows that the UK economy is failing to grow. Gross domestic product remained stagnant between July and September, and the Bank of England predicts zero growth until 2025.

The Office for National Statistics (ONS) stated that the rising fuel prices may have affected petrol and diesel sales. Additionally, demand for other goods also decreased. Heather Bovill, deputy director for survey and economic indicators at the ONS, highlighted that household goods and clothing stores faced challenges from cost of living pressures, reduced footfall, and poor weather.

Storm Babet, which brought heavy rainfall, impacted the UK in October and contributed to a decline in fuel sales. Retailers reported that consumers were spending their money cautiously, influenced by both the bad weather and the economic climate. While supermarkets saw an increase in food sales, specialist stores such as butchers and bakers experienced a decline. Sales of alcohol and tobacco also dropped by 4.2% and 10.4% respectively. Retailers noted that shoppers were opting for cheaper products and prioritizing essential items.

The retail sector now enters its crucial trading period, including the Christmas season. Lisa Hooker, leader of industry for consumer markets at PwC, expressed hope that consumers would engage in last-minute Christmas spending in December, as they had done during tough times earlier in the year.

Compared to the same period last year, retail sales volumes were 2.7% lower. The ONS also revised its initial estimate of a 0.9% decline in retail sales for September to a drop of 1.1%.

Inflation, which measures the rate of price increases, significantly fell to 4.6% in the year to October from 6.7%. This follows a series of interest rate hikes by the Bank of England. While raising rates can help reduce inflation, it also impacts economic growth by increasing the cost of borrowing for consumers and businesses.

Aled Patchett, head of retail and consumer goods at Lloyds Bank, noted that the declining sales indicate that rising household costs continue to be a concern for consumers, despite the recent easing of headline inflation. Patchett emphasized that the rising cost of living hampers discretionary incomes, and households prioritize essential spending, especially during winter months when energy usage increases.