Retail sales in Great Britain fall as struggling households cut back

Retail sales in Great Britain fell more steeply than expected last month, marking a significant negative economic update ahead of Chancellor John Healey's budget announcement next week. According to the Office for National Statistics (ONS), the volume of goods sold decreased by 0.4% month-on-month in September, which was much worse than economists' consensus expectations of a 0.1% decline.

The drop in sales was partly driven by poor online sales of autumn and winter wear, attributed to unseasonably warm weather. Additionally, figures indicate that consumer confidence in the UK has fallen at the fastest rate since the Covid pandemic.

While retail sales declined across almost all sectors, the volume of motor fuel sold actually increased by 2.2% month-on-month in September, despite record-high prices at the pump. This surge in fuel sales returned to levels last seen before the onset of the conflict in the Middle East. In value terms, the 6.1% increase in fuel sales represents the largest month-on-month rise since the 10.9% increase recorded in March, immediately following the start of the US-Iran conflict.