The UK economy has so far defied those, like the Bank of England, who confidently predicted a recession. But the threat is not over yet, as the retail sales figures for October show.
Not only were sales volumes down by 0.3 per cent over the month, but the Office for National Statistics (ONS) also revised its estimate for sales volumes in September downwards from minus 0.9 per cent to minus 1.1 per cent. Over the three months to October – a better guide as the number is based on more data – sales were also down 1.1 per cent. Over the year to October, sales volumes were down 2.7 per cent (although the amount we spent was up 2.2 per cent, a reflection of inflation).
The biggest influence on the October figures were sales of automotive fuel, which were down 2 per cent in volume. We seem to be driving less – at least in petrol and diesel cars. The question is, though, is this a reaction to higher fuel prices? Or is it down to a structural change, caused by a switch towards electric cars, or even perhaps because of people finding alternative ways of travelling?
It stands to reason that over time, the sale of automotive fuels is going to slide as motorists are persuaded, or forced, to buy electric vehicles. If you charge such a vehicle at home, your consumption of electricity is not going to appear on retail sales figures.
Will retail sales start to recover now that, finally, earnings are growing again in real terms?
There is another possible factor in the decline in fuel sales: the Ulez expansion in London and the introduction of low emission zones in other cities is making driving in urban areas an ever more difficult and expensive business. According to the Department for Transport there are 60,000 fewer vehicles – a drop of 2.16 per cent – registered to London addresses than there were in 2016. Therefore, if people are ditching their cars, or using them less, it should come as no surprise.
As for food shops, sales were down 0.3 per cent over the month. Non-food retailing was down 0.2 per cent. Online retailers, however, had a better month: sales were up 0.8 per cent in October, following a fall of 2.4 per cent in September.
Markedly, retail sales volumes are now lower than they were before the pandemic. In the immediate months after lockdown, we rushed back to the shops, pushing sales volumes higher than pre-pandemic. But over the past year, sales volumes have sunk back down below their 2019 level.
Retail sales do not represent the entire economy, but they are a rather important part of it. Will they start to recover now that, finally, earnings are growing again in real terms (median earnings are up 7.7 per cent over the past year, while inflation has fallen to 4.6 per cent)? There is little sign yet of an end to the year-long recession on the high street.
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