Macro
UK retail sales volumes fall 0.4% in September as warm weather hits clothing, but third quarter grows 0.7%
A steeper-than-expected monthly drop lands days before the October 28 budget and the Bank of England's November 5 decision.
HedgeWeekly News Desk ·
Retail sales volumes in Great Britain dropped 0.4% in September from August, the Office for National Statistics said on Friday, a deeper decline than the 0.1% fall economists had forecast. Volumes were 0.8% higher than a year earlier, short of the 1.0% consensus. The ONS revised August's gain up to 0.7% from 0.5% and trimmed July's fall to 0.4% from 0.5%.
Non-food stores fell 0.4% on the month, with clothing, footwear and sports equipment lower as retailers reported weaker footfall and customers cutting back, while hardware dragged on household goods. Online clothing sellers told the ONS that autumn and winter ranges sold poorly in what the Met Office recorded as the joint-fourth warmest September on record. Supermarket volumes slipped to slightly below June levels after gains in July and August, while fuel volumes rose despite further price increases.
The quarterly picture was firmer. Volumes grew 0.7% in the three months to September compared with the prior three months and were 1.5% above the same quarter of 2025. ONS senior statistician Hannah Finselbach attributed the quarterly growth mainly to motor fuel sales returning to levels seen before the Middle East conflict, with food and drink also helped by warm weather and the World Cup. Total spending values rose 0.3% in September even as volumes fell, and online's share of spending eased to 28.8% from 28.9%.
Why it matters: the gap between rising spending values and falling volumes means households paid more for less in September, the same month UK consumer price inflation climbed to 3.5% from 3.1%. Reuters reported this week that investors expect the Bank of England to lift Bank Rate to 4% on November 5, its first hike in more than three years, and the chancellor presents the budget on October 28. A softer consumer complicates that hiking case for gilt and sterling investors, though the quarter's 0.7% gain shows spending held up over the summer. The next retail sales release is due November 20, after the rate decision.