UK may be in retail recession as September sales fall steeply | Retail industry

The UK may already be in a retail recession after sales suffered a much steeper than expected fall in September.

Unseasonably warm weather kept shoppers out of stores, and consumers cut back on non-essential spending amid the cost of living crisis, official data shows.

Figures from the Office for National Statistics show a 0.9% month-on-month fall in retail sales volumes in Great Britain in September. This followed a 0.4% rise in August and is considerably worse than the 0.2% decline that had been expected by analysts.

Overall, non-food stores sales fell by 1.9% as consumers steered clear of buying autumn and winter wear and enjoyed the last of the late summer sun.

“Retail sales fell notably in September with retailers telling us that cost of living pressures are influencing consumers, particularly for sales of non-essential goods,” Grant Fitzner, the chief economist at the ONS, said. “It was a poor month for clothing stores as the warm autumnal conditions reduced sales of colder weather gear.”

Department store and household goods sales fell by 1.6% and 2.3% respectively month on month as consumers cut back on big-ticket purchases.

However, there was a modest 0.2% rise in the volume of sales at food stores and supermarkets in September, although this was down on the 1.4% monthly boost reported in August.

Fuel sales volumes rose 0.8% in September, having fallen 1% the previous month, because of more rail strikes last month.

Online sales volumes suffered a 2.2% drop, with the broad fall in retail sales prompting analysts at Capital Economics to suggest the UK had entered a retail recession.

“The fall in retail sales volumes in September meant sales volumes fell 0.8% quarter on quarter in the third quarter and suggests that after the 18-month-long retail recession came to an end in the first quarter, the sector may already be back in recession,” said Alex Kerr, an assistant economist at Capital Economics.

“Sales volumes fell in each of the other five main categories [other than fuel], which indicates that the weakness was fairly broad-based. This doesn’t bode well for retail sales growth in the run-up to Christmas,” Kerr added.

The overall amount spent shopping also fell 0.2% month on month, compared with a 4.7% increase in September last year, as consumers desperately try to rein in overall household spending in the face of soaring prices because of inflation.