September's UK retail sales data a "blip" amid unusually warm weather

(Alliance News) - UK retail sales increased again last month, data on Tuesday showed, though the rate of growth slowed as purchases of big-ticket items fell amid cost of living pressures.

According to the latest British Retail Consortium-KPMG tracker, UK retail sales rose 2.7% on-year in September. Growth slowed from 4.1% in August.

The latest reading was in line with the three-month average growth rate, but lagged the 12-month average climb of 4.2%.

Food sales increased 7.4% on-year over the three months to September, though non-food sales decreased 1.2%.

Despite the dip in retail sale growth, Gabriella Dickens, senior UK economist at Pantheon Macroeconomic, doubted that a "consumer-led recession" is brewing, calling September's figures a "blip."

Dickens noted that the mean temperature in the UK during September was 2.5 degrees Celsius higher than the average recorded between 1970 and 2022, meaning that consumers were likely put off from purchasing autumnal clothing.

"Further," Dickens added, "growth in households' real disposable incomes over the coming months, as wage increases continue to outpace price rises, however, should ensure that a consumer-led recession is avoided. Consumers' confidence also has recovered significantly over the last six months, consistent with expenditure edging up."

Dickinson added: "With sales volumes down, growth has been artificially boosted by high inflation over the last two years. As inflation eases, so too will longer-term sales growth prospects. The coming months are crucial for retailers as they enter the 'golden quarter' and they're investing heavily to support customers and bring prices down."

Clive Black, a research analyst at Shore Capital, said if current high temperatures were to persist then seasonal full-price sales may ease, leading to "a bit of a markdown/sale event".

Black also eyed the imminent key festive season with some caution.

"The forthcoming festive season is set against a strong 2022 Christmas, so quite a tough comparative despite the then cost of living crisis narrative, noting the sense of relief nearly a year ago as folks, families, friends and work colleagues could effectively get together for the first time since 2019 as a result of the pandemic," he said.

"Such a sense of relief and celebration may not be repeated to the same extent in Christmas 2023, but we do still anticipate that the British will prioritise the festive celebration, the experience of eating and drinking lots in volume and mix, whilst more carefully and selectively gifting with both goods and services."

By Heather Rydings, Alliance News senior economics reporter

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