UK retail sales growth slows as shoppers delay Christmas spend

(Sharecast News) - UK retail sales growth slowed to an annual rate of 2.5% in October, according to figures released Tuesday by the British Retail Consortium and KPMG, as milder weather and deal-hunting delayed seasonal spending. The BRC-KPMG Retail Sales Monitor revealed that growth fell from 2.7% in September, and 4.1% in August. This was well below the three-month average of +3.1% and the 12-month average of +4.2%.

The three-month average growth in food sales rose to 7.9%, from 7.4% the month before, while non-food sales were down 1%, from -1.2% the month before.

"Retail sales growth slowed as high mortgage and rental costs further shook consumer confidence," said BRC's chief executive Helen Dickinson.

"Many households are also delaying their Christmas spending in the hopes they can grab a bargain in the upcoming Black Friday sales. The cost-of-living squeeze meant more was spent on lower-price indulgences, such as beauty products - the so-called 'Lipstick Effect'. Meanwhile, the arrival of some colder weather helped to boost fashion sales, particularly for outdoor wear."

Meanwhile, KPMG's head of retail Paul Martin pointed out that online sales continued to "struggle", with sales falling in every category other than health and 'other non-food'. "This could herald the most competitive Black Friday period that we've seen in a while," he said.

"Whilst consumers are now operating in a lower inflationary environment compared to October last year where inflation peaked at over 11%, there is no doubt that the last 12 months have taken a toll on confidence and their ability to spend. Coupled with a higher interest rate environment, dwindling covid savings and the heating coming back on, beleaguered consumers are thinking very carefully about how they spend their money. As a result, the strong demand that has kept some retailers afloat over the last 18 months is now falling away."