UK retail sales slump as inflation squeezes consumers – business live

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UK retail sales volumes fell by 0.8% last month, as inflation eroded Britons’ spending power

Earlier:

11.47am BST

Briton’s literally tightened their belts last month, it seems.

Today’s retail sales report shows that the amount of food bought in the shops fell by 1.2% in September, compared to a year ago.

11.33am BST

Today’s retail sales figures make a hat-trick of worrying UK economic data this week.

On Tuesday, inflation jumped to 3% – its highest level in four and a half-years. More expensive food and fuel was partly to blame.

‘September’s retail sales figures show some evidence of belt tightening, with discretionary spending taking a particularly big hit, as shoppers prioritise more essential items as prices rise.

This has given the pound a bit of a bloody nose on the currency markets, with investors scaling back their expectations of a rate rise from the Bank of England.

10.20am BST

The 0.8% drop in UK retail sales in September shows that the surge in inflation since the Brexit vote is hurting

So argues PwC’s Andrew Sentance. He points out that retail sales growth has fallen sharply this year, to below its long-term average.

Latest retail sales figures confirm sharp slowdown in growth. Annual rate down to 1.5pc in past 3 months compared with 5.5pc at end of 2016 pic.twitter.com/edna3njpHa

The underlying trend is towards slower retail growth and we are seeing the weakest rate of increase in the volume of spending for over four years and since the summer of 2013. In the past three months, year-on-year sales volumes were up just 1.5%, compared with around 4% annual growth in the three years 2014 to 2016.

“The main reason for this slowdown is inflation. Prices of goods bought in shops, at petrol stations and online in September were 3.3% up on a year ago, whereas only a year ago they were falling by 1%. This surge in inflation – which mainly reflects the fall in sterling since the EU Referendum vote – is squeezing consumers and holding back the growth of retail spending in volume terms.”

Evidence is growing to suggest that Britain’s shoppers are keeping wallets in pockets against a backdrop of growing uncertainty.

“Five-year high inflation combined with slow wage growth has consumers feeling the pinch….

UK retail sales fall 0.8% in Sep. Weak data not exactly a shock – household balance sheets not strong enough to support a continued surge.

Sep 0.8% m/m drop in UK #retail #sales volumes led by 1.5% drop in non-food sales. Shows consumer reluctance to make discretionary purchases

Disappointing Sep #UK #retail #sales may weigh down on expectations that #BOE will hike #interest #rates from 0.25% to 0.50% on 2 Nov

10.05am BST

Here’s Jeremy Cook, chief economist at WorldFirst, on the retail sales slowdown:

“Uncomfortable questions have been raised about just where UK growth is going to emerge from in Q4. Consumption is the engine of the UK economy and the retail sector, which hammered by a weak pound, tighter margins and customers beset by real wage declines are in the eye of the storm at the moment.

“We will find out in the coming months whether this is consumers holding off on purchases in preparation for Christmas, or whether the Bank of England’s messaging on interest rate rises has been enough to keep some hands in pockets. We can but hope that this weakening sales pattern is also bringing about a slowing of the consumer credit expansion; retail sales in the past have been powered by a ‘buy-now-pay-later’ mentality and we continue to worry about a ‘buy-now-default-later’ reality.”

10.04am BST

Given real wages are shrinking, it’s not a surprise that people are buying less stuff in the shops.

Alex Marsh, managing director of Close Brothers Retail Finance, suggests that consumer confidence has dipped – although there are other reasons why shoppers cut back:

Following the unexpectedly positive uplift in retail sales in August, this month’s figures signal a downturn in consumer confidence as the ONS reports a 0.8% decrease in retail sales last month.

September is a notoriously busy month for those returning to full time education and embarking on graduate jobs, leaving limited time for shopping. This “back to normality” month sees consumers returning to a more reserved level of spending as consumers resume their regular routines and holiday expenditure slows.

9.57am BST

City economists had only expected UK retail sales to dip by 0.1% last month, so today’s 0.8% decline is alarming traders.

Crap bunch of UK retail sales figures. Weaker than all expectations in @ReutersPolls pic.twitter.com/QHGQBzG8bB

9.54am BST

The big picture in today’s retail sales report is that growth has slowed significantly over the last three months:

UK retail sales annual growth 3-month average at 1.6% YoY is the lowest since October 2013. pic.twitter.com/xhMdtkfcEv

9.49am BST

The pound has fallen by over half a cent against the US dollar, to $1.314.

The news that UK shoppers cut back last month has disappointed the City, as it may signal that the economy is slowing.

#Pound drops to intraday low of $1.3133 as September U.K. retail sales fall short of expectations pic.twitter.com/9cjuq3CHiS

9.43am BST

NEWSFLASH: UK retail sales were much weaker than expected last month.

The amount bought across the retail industry shrank by 0.8% during September, a sign that consumers reined in their spending. Non-food stores suffered the biggest decline in takings.

“September’s retail sales saw a monthly decline of 0.8%, reversing August’s growth. However, there is a continuation of the underlying trend of steady growth in sales volumes following a weak start to the year, and a background of generally rising prices.

These increased costs are reflected in the more rapid growth in the amount spent when compared with the quantity bought.”

9.32am BST

The New Zealand dollar has more than 1% since the left-leaning Labour Party won the battle to form the next government.

New Zealand dollar plunges as much as 1.3% as country has youngest PM in 150+ years https://t.co/ZZ3JTZ00vi pic.twitter.com/RAIviWYaZI

9.28am BST

Europe’s stock markets are all falling this morning, failing to take much comfort from China’s growth figures.

Unilever’s sales gloom has helped to pull the FTSE 100 down by 41 points.

#BREAKING: Madrid responds that it plans to push ahead with move to seek direct rule over Catalonia, which wd be an unprecedented escalation

That is a heck of a move in the out of hours Dow – currently -130 points from Weds close: pic.twitter.com/SBsmLcPDUS

9.21am BST

Back in the City, shares in consumer giant Unilever have fallen by 3.5% after the company disappointed investors today.

Unilever CEO Paul Polman blamed “poorer weather in Europe and natural disasters in the Americas” for a slowdown in underlying sales growth, to 2.6% in the last three months.

Overall market conditions have remained challenging. In the markets in which we operate volumes were flat in aggregate. We are seeing some early signs of improving conditions in emerging markets.

#Unilever shares -3.5% as DMs struggle vs EMs. I see a bit of blame around hurricanes but the ‘soft’ comment about ice creams made me smile pic.twitter.com/93M7GfpgjV

9.06am BST

China’s official growth rate over the last five years is very consistent….

#China‘s data illustrated the robust underlying GDP trend while fixed assets investment slowed as authorities try to rein in credit growth. pic.twitter.com/NEdLqqfzAY

8.56am BST

Finnish economist Iikka Korhonen suggests that China’s growth rate is suspiciously consistent, despite remarkable volatility in business spending, factory output and retail sales.

#China September
retail sales +9.3% yoy
industrial production 6.6%
fixed investment 0.0%
Q3
GDP 6.8%
(forecasting GDP=draw a straight line?) pic.twitter.com/H4mTy3xMem

#China Fixed Asset Investment (YTD) year-on-year at 7.5% https://t.co/MQfB0k66aY pic.twitter.com/guY7vo2I0s

China data day!
GDP Y/Y 6.8% (est 6.8%, prev 6.9%)
Retail sales 10.3% (10.2%, 10.1%)
IP 6.6% (6.5%, 6%)
Fixed asset YTD 7.5% (7.7%, 7.8%) pic.twitter.com/hfUXyHHQxz

8.46am BST

Financial experts are often sceptical about China’s growth figures, arguing that they could be manipulated by officials to produce a number to Beijing’s liking.

But on face value, today’s Q3 GDP report looks fairly impressive.

Property Sales finally showed some signs of slowing in response to the curbs, and while govt spending on infrastructure and some inventory building were key contributors to growth, it is also increasingly obvious that the Services sector (particularly the tech sector) is increasingly becoming a, if not the, primary driver of growth, i.e. signalling that the economy is actually rebalancing.

8.25am BST

China’s economy has shrugged off fears of a sharp slowdown, by notching up another quarter of solid growth.

Good #China morning! Chinese #GDP growth was 6.8% YoY in Q3, even as focus on deleveraging intensified. pic.twitter.com/wTKq7GkK8g

“Houses are for living, not for speculating.”

Related: Xi Jinping speech: five things you need to know

8.03am BST

Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.

After a strong August in both value and volume terms, led by non-food stores, the market is looking for somewhat of a pull-back this time in expecting a month-on-month decline in volumes.

With Christmas coming it wouldn’t be too much of a surprise if we were to see a pause in the September numbers. Expectations are for a slowdown from August’s 1% rise to no change or a slightly negative reading of -0.1, as Q3 comes to an end.

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London Stock Exchange begins process to find new CEO as Xavier Rolet announces he’s quitting https://t.co/0hcdR7h3qA pic.twitter.com/rmWDuvoBNS

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Source: china
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