Consumers unexpectedly cautious with spending in October

Consumers were unexpectedly cautious in their spending in October after showing sustained confidence in the face of Brexit uncertainty, official figures show.

Sales over the three months to October rose at their weakest pace in a year-and-a-half, according to the Office for National Statistics.

Monthly retail sales volumes unexpectedly fell, by -0.1%, while sales posted a weaker-than-expected 3.1% increase compared with October 2018.

Over the three months to October, a figure that evens out monthly volatility, sales rose by 0.2% compared with the previous three-month period, the weakest rise since the three months to April 2018, and 2.9% higher than a year before.

An ONS spokeswoman said: “Retail sales increased at a slower rate in the latest three months, with growth the weakest seen since April of last year.

“All main sectors saw falling sales apart from food shops.

“Department store sales rebounded in October, driven by promotional events and an earlier introduction of Christmas lines. However, their sales still remain significantly down over the longer term.”

Karen Johnson, head of retail and wholesale at Barclays Corporate Banking, said: “October can feel a bit like the calm before the storm in retail and this year is no exception, with last month once again serving as the warm-up act before the main event.

“The result was slightly below expectations but decent enough in a tough environment, with a welcome return to form of sorts for department stores, albeit driven by some early discounting.”

She added: “There’s been a lot of speculation around the impact a General Election at an inconvenient time might have on retail, but I think this is probably overstated, with consumers’ short-term spending plans unlikely to be significantly affected by going to the polls.”

Ed Monk, associate director for personal investing at Fidelity International, said: “With many of the UK’s largest retailers unveiling their festive adverts this week, the countdown to Christmas is well and truly on. However, this morning’s retail sales figures – which once again show households cautious in their spending – suggest it could be a long, hard winter. The sales periods around Black Friday and Christmas will, once again, prove crucial.

“While a first winter election since 1923 is likely to prompt further caution amongst spenders, whether this detracts from the usual Christmas sales spree awaits to be seen.

“With the end of the year drawing close, stalling wage growth and a slowing rate of inflation highlight the strain the economy is under. The coming weeks will be key in helping to decide the sort of saving and spending resolutions households around the UK make as we enter the new year.”