UK retail sales volumes fell 0.4% in September, a larger drop than economists expected, as warm weather curbed clothing purchases. Third-quarter volumes still rose 0.7%, but a sharp fall in consumer confidence points to pressure on households ahead of next week's Budget.
British retail sales volumes fell 0.4% in September, against economists' expectations for a 0.1% decline, the Office for National Statistics said on Friday. The drop followed a revised 0.7% increase in August.
Warm weather hits clothing and supermarket sales
Sales at clothing stores dropped 0.9% as warm weather discouraged purchases of autumn and winter ranges. Lower clothing sales also contributed to a 0.4% decline in supermarket sales.
Fuel partly offset the fall. Automotive fuel sales rose 2.2%, as households filled their tanks ahead of further price increases.
Third-quarter volumes still rise 0.7%
Despite September's monthly contraction, retail sales volumes rose 0.7% in the third quarter compared with the previous three months. ActionForex adds that sales were 1.5% higher than in the corresponding quarter of 2025.
Consumer confidence falls ahead of the Budget
Consumer confidence fell to -24 in October from -13 in September, its lowest level in six months, according to GfK data. Rising fuel and utility bills, higher borrowing costs and fears of tax increases in the Budget have weighed on household sentiment.
Paul Dales, chief UK economist at Capital Economics, said the confidence decline pointed to further weakness in retail sales, with annual growth in volumes potentially falling from 0.8% in September to well below zero. Capital Economics also expects real consumer spending and gross domestic product to stagnate in the fourth quarter of 2026 and the first quarter of 2027.
Sources: Investing.com, ActionForex
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