UK Retail Sales Decline On Food Sales

UK retail sales dropped more-than-expected in September reflecting the biggest decline in food store sales in almost two years, figures from the Office for National Statistics revealed Thursday.

Retail sales including auto fuel fell 0.8 percent month-on-month in September, due mainly to a large decline of 1.5 percent in food stores, which was the largest food store sales fall since October 2015.

Economists had forecast retail sales to fall 0.4 percent offsetting August's 0.4 percent rise. A similar bigger decline was last seen in March. At the same time, non-food store sales gained 0.1 percent.

Sales volume excluding auto fuel also dropped 0.8 percent on month, following a 0.5 percent rise in August. Economists had forecast a 0.4 percent fall for September.

On a yearly basis, overall retail sales volume growth slowed to 3 percent from 3.4 percent in August. Likewise, sales excluding auto fuel, grew at a slower pace of 3.2 percent versus 3.6 percent a month ago.

In three months to September, retail sales volume increased 1.2 percent from the previous three months.

ONS Head of Retail Sales Rhian Murphy said, "Retail continued to grow in the three months to September with jewellery shops and online stores seeing particularly strong sales."

"This was despite a stark slowdown in food sales in September, following a bumper summer."

Although September's retail sales figures were weaker than expected, sales still rose strongly over third quarter as a whole, Ruth Gregory, an economist at Capital Economics, said.

And with sustained rises in real pay now in prospect, this should pave the way for a gradual recovery in consumer spending growth in the year ahead, Gregory added.