Reuters logo
UPDATE 1-Britain's shoppers rein in spending, first yearly decline since 2013
November 16, 2017 / 10:59 AM / a month ago

UPDATE 1-Britain's shoppers rein in spending, first yearly decline since 2013

    * UK retail sales decline y/y for first time since March
2013
    * Monthly sales up 0.3 percent
    * Data better than expected, but shows inflation impact

 (Adds market reaction, economists)
    By David Milliken and Paul Sandle
    LONDON, Nov 16 (Reuters) - British retail sales recorded
their first year-on-year decline since 2013 last month as
consumers struggled with fast-rising prices and stagnant wages.
    Although the fall was less severe than analysts had
expected, the official data showed a 0.3 percent year-on-year
fall in sales volumes -- the biggest since March 2013.
    That partly reflected a very strong performance by retailers
in October 2016 which distorted the comparison.
    "We are continuing to see an underlying picture of steady
growth in retail sales, although this October suffered in
comparison with a very strong October in 2016," ONS statistician
Kate Davies said.
    Mild weather also put shoppers off buying winter clothes,
adding to the weakness in the figures.
    But volumes were still far lower that they were before the
June 2016 vote to leave the European Union hit sterling and
drove up inflation.
    Looking at the three months to October, which smooths out
monthly volatility in the data, sales growth picked up to 0.9
percent from 0.7 percent in the three months to September.
    This meant sales volumes in the three months to October were
just 1.1 percent higher than the year before, the weakest growth
rate since May 2013.
    Sterling rose slightly after the data and British government
bond prices edged down as the sales figures came in less weak
than suggested by a series of other surveys of retailers.
                         
    "This is in stark contrast to the survey data which were
pointing to an absolute bloodbath," Alan Clarke, an economist
with Scotiabank, said. 
    "Things are probably as bad as they are going to get, so I'd
be hesitant to extrapolate the downward trend too far," he said.
"Next year should be a better year as lower inflation and firmer
wages reverse this year's downwards trend."
    Economists taking part in a Reuters poll had predicted sales
would drop 0.6 percent on the year and grow just 0.1 percent on
the month, according to the median forecasts. 
    The ONS said monthly sales in fact rose by 0.3 percent along
with the minus 0.3 percent year-on-year figure.
    
    SLOW DOWN
    The Bank of England raised interest rates on Nov. 2, saying
it forecast household consumption growth, adjusted for
inflation, would slow to 1 percent next year from 1.5 percent.
    It also said it expected inflation would peak in October
before slowly falling back towards its 2 percent target over the
next three years.
    Official data earlier this week showed that consumer price
inflation held at a five-year high of 3 percent in October 
while regular pay, adjusted for inflation, suffered its longest
run of falls in almost three years.             
    Recent reports from British retailers have also indicated
consumers may be tightening their belts.
    Department store chain John Lewis          has posted seven
straight weeks of sales decline, clothing retailer Next        
missed analysts' quarterly forecasts, and Marks & Spencer
        said it faced "stronger headwinds" in food and was
slowing openings of its upmarket convenience stores.            
                         
    The ONS said that retail sales growth in cash terms slowed
to an annual 2.8 percent in October, down from 4.6 percent in
September and the weakest since June 2016.    
    The gauge of inflation used in the retail sales data, the
retail price deflator, dropped to 3.1 percent in October from
3.3 percent in September.

    
 (Reporting by David Milliken and Paul Sandle Editing by William
Schomberg/Jeremy Gaunt)
  

0 : 0
  • narrow-browser-and-phone
  • medium-browser-and-portrait-tablet
  • landscape-tablet
  • medium-wide-browser
  • wide-browser-and-larger
  • medium-browser-and-landscape-tablet
  • medium-wide-browser-and-larger
  • above-phone
  • portrait-tablet-and-above
  • above-portrait-tablet
  • landscape-tablet-and-above
  • landscape-tablet-and-medium-wide-browser
  • portrait-tablet-and-below
  • landscape-tablet-and-below