It was the weather wot did it, wot stopped us spending in the shops. Yet again, the favourite old excuse has been trotted out by retailers trying to explain where their sales have vanished.
Retail sales volumes in September, the Office for National Statistics (ONS) reports this morning, plunged by 0.9 per cent in September, with a quarterly fall of 0.8 per cent. Apparently the hot weather in September is to thank for delaying us going down to the high street to try on all the exciting autumn collections (although why we didn’t do this later in the month when temperatures fell they don’t explain).
There is, of course, an obvious alternative explanation: that consumers are being dragged down by high inflation and high interest rates. Retail sales may have held up surprisingly well in the early stages of the inflationary surge, but there is only so much punishment that household budgets can take. At some point, inevitably, they were always going to have to be redrawn.
Britain remains stuck in its purgatory of low growth, with the threat of recession ever on the horizon
The fall in sales volumes is happening across the board, not just in clothing – sales volumes of which fell by 1.6 per cent across the month. Household goods fell even more, by 2.3 per cent. Nor was there much joy for online retail: the shift online seems, for the moment, to have stalled. Non-store retailing fell 2.2 per cent over the month, on top of a fall of 0.9 per cent in August.
Retail sales figures, needless to say, are a very important input into the Monetary Policy Committee’s (MPC) interest rate decisions. Today’s figures make it less likely that there will be any further rises in interest rates in the near future.
But neither is there much sign that rates will be coming down in a hurry. While retail sales have fallen, inflation remains stubbornly high, staying at 6.7 per cent in September. The MPC will concerned, too, at the speed that wages are recovering, with wages rising by 7.8 per cent in the year to June-August. The Bank of England’s Monetary Policy Report in August was predicated on wage rises moderating by the end of this year. It is very questionable as to whether that will happen.
Britain remains, then, stuck in its purgatory of low growth, with the threat of recession ever on the horizon. It is becoming harder to see how we exit that place. One thing is for sure: October’s weather isn’t going to provide a boon for retailers, except for those who sell galoshes.
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