UK retail sales declined unexpectedly in October as high interest rates hurt spending ahead of the festive season, official data revealed on Friday.
Retail sales logged a 0.3 percent monthly drop but slower than the September’s revised 1.1 percent decrease, the Office for National Statistics said. However, the fall confounded forecast of 0.3 percent gain.
Similarly, excluding auto fuel, retail sales slid 0.1 percent after a 1.3 percent decline. Sales were forecast to grow 0.4 percent.
Food store sales decreased 0.3 percent and non-food store sales dropped 0.2 percent.
The high cost of living, reduced footfall and the wet weather contributed to the decline in non-food store sales. Automotive fuel sales fell 2.0 percent.
On the other hand, non-store retailing sales rebounded 0.8 percent after a 2.4 percent fall.
On a yearly basis, the decline in retail sales deepened to 2.7 percent from 1.3 percent in September and worse than economists’ expectations of 1.5 percent drop.
Excluding auto fuel, sales fell 2.4 percent following a 1.5 percent decrease. Sales were expected to fall again by 1.5 percent.
Capital Economics economist Alex Kerr said the weak retail activity in the third quarter suggests higher interest rates are taking a bigger toll on real consumer spending.
As that drag continues, retail activity is likely to remain weak in the run up to the crucial festive period, the economist added.