Rocketing food inflation and uncertainty about the outlook for the UK economy have sent retail sales tumbling to their first year-on-year fall since 2013.
Food prices, which were 3.5% higher than a year earlier, helped push the volume of goods bought in shops and online down by 0.3% from October 2016.
The month-on-month figure was more upbeat after it showed a 0.3% increase on the previous month following strong sales in charity shops, auction houses, antiques and fine art dealers, the Office for National Statistics said.
But this monthly increase failed to make up for September’s 0.7% slump from August and lacklustre spending over much of the year.
Kate Davies, a senior statistician at the ONS, said there was an “underlying picture of steady growth in retail sales”, though second-hand goods were the main reason for October’s month-on-month rise.
The value and volume of goods bought in October compared with the previous month increased by only 0.1% after fuel was stripped out of the figures, indicating the strength of petrol purchases ahead of price rises seen this month.
Samuel Tombs, the chief UK economist at Pantheon Macroeconomics, said: “Retail sales volumes recovered only partially from September’s 0.7% month-on-month drop, underlining that consumers have adopted a cautious mindset.
“Admittedly, surveys had pointed to a further fall in sales in October, but sales of motor fuel and at ‘other’ stores – which the surveys cover poorly – jumped by 2.0% and 3.1% respectively. The rise in motor fuel sales likely will be reversed immediately in November, as pump prices respond to the recent surge in oil prices,” he said.
Analysts have pointed to the recent mild weather as a dampener on winter clothes sales and food inflation, which hit 4% month on month, as important elements depressing retail sales.
A survey by credit card provider Visa found that consumer spending shrank by 2% in October, the fastest year-on-year decline in four years and the fifth monthly decline in six months. The report said the fall was driven by a 5% decline in spending on the high street.
The CBI said following its survey of retailers that 50% suffered declining sales in October, while only 15% benefited from an increase, leaving a rounded balance of -36%, the lowest since March 2009.
Anxiety about the the economic outlook, which is reflected in recent consumer confidence surveys, has also deterred shoppers from buying big-ticket items such as furniture.
Keith Richardson, a retail sector spokesman for Lloyds Bank, said: “Warmer than expected weather left retailers feeling cold in October as families chose not to spend half term shopping for new coats or winter warmers.
“When the Bank of England raised interest rates for the first time in a decade, it said it believed the economy was strong and that the consumer had already borne the worst of the squeeze on incomes.
“Retailers will definitely be hoping that they are right. These figures show that shoppers were already tightening their belts before the rate rise.”
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