© Reuters. FILE PHOTO: Customers carry luggage in London, Britain August 25, 2016. REUTERS/Neil Corridor/File Picture


By David Milliken and Andy Bruce

LONDON (Reuters) -British retail gross sales unexpectedly fell for a fifth month in a row final month, regardless of a rush of motorists filling their automobiles with gas, including to indicators that Britain’s financial restoration is shedding momentum.

Gross sales volumes dropped by 0.2% in September, official figures confirmed on Friday, as supply-chain issues led to gaps on retailer cabinets. It marked the longest run of consecutive month-to-month falls for the reason that collection started in 1996 and bucked economists’ expectations in a Reuters ballot for an increase of 0.5%.

This softness provides to the conundrum confronted by the Financial institution of England over whether or not to counter quickly rising inflation by elevating rates of interest subsequent month, or as an alternative to attend for the economic system to get better extra of the bottom it misplaced to the pandemic.

“General, the info help our view that the financial restoration stalled in September,” mentioned Bethany Beckett, UK economist at Capital Economics.

Retail gross sales rebounded strongly within the first a part of the yr as lockdown restrictions eased first for retailers. However they’ve fallen steadily since a peak in April, partly as folks spent extra on holidays and consuming out after social-distancing restrictions had been relaxed extra usually.

Within the three months to September gross sales fell 3.9%, which the Workplace for Nationwide Statistics mentioned would scale back broader financial progress within the third quarter by 0.2 share factors.

In contrast with earlier than the pandemic, gross sales volumes are 4.2% greater, however they’re 1.3% under the place they had been a yr in the past.


Provide-chain bottlenecks led to gaps on some grocery store cabinets, and lots of petrol stations ran out of gas in late September and early October as shortages of tanker drivers led to queues of automobiles making an attempt to refill.

“Labour shortages throughout the availability chains, on farms, factories, warehouses and lorry drivers, all threaten to derail this restoration,” the British Retail Consortium’s chief govt, Helen Dickinson, warned after the info.

Petrol gross sales in September exceeded pre-pandemic ranges for the primary time, however there was a pointy drop in gross sales of family items comparable to furnishings and lighting, the ONS mentioned.

Shopper value inflation can also be accelerating sharply, due largely to greater power costs, and the BoE predicts it should exceed 4% across the finish of this yr, double its goal degree.

A narrower measure of inflation used within the retail gross sales information rose to three.7% in September, its highest since December 2011.

The prospect of upper costs — in addition to a newer upsurge in COVID-19 circumstances — has dampened customers’ temper. GfK reported earlier on Friday that its long-running sentiment survey confirmed the bottom morale since February, when Britain was nonetheless in lockdown.

Retailers additionally face a dilemma over how a lot they need to go on value rises to customers. Low cost chain Poundland and on-line trend retailer Boohoo each warned of decrease revenue margins in latest weeks.

The BRC mentioned three out of 5 retailers anticipated costs to rise earlier than Christmas.

One other on-line trend retailer, ASOS (LON:), parted methods with its chief govt final week amid fears that offer chain pressures and customers returning to pre-pandemic behaviour would scale back income by 40% subsequent yr.

Friday’s ONS information confirmed on-line spending remained robust total at 28% of complete retail gross sales in September, up from 20% earlier than the pandemic. However it’s far under its peak of 37% in January when high-street outlets had been closed throughout lockdown.