Retail sales volumes fall in September as shoppers cut spending

British shoppers reined in their spending more sharply than expected in September as they felt the hit from rising prices, and a one-off bank holiday to mark the funeral of Queen Elizabeth also weighed on retail sales figures for the month.

Sales volumes fell by 1.4 per cent from August, according to ONS figures. Over the three months to September, sales were down 2 per cent, the biggest fall since the first three months to September 2021.

Consumers have been reining in their spending with inflation hitting 10 per cent, adding to the strains on the economy which is expected to go into recession soon.

Households also face the prospect of a tighter squeeze on their spending power in 2023 after new chancellor Jeremy Hunt scrapped tax cuts previously planned by Prime Minister Liz Truss. She announced on Thursday that she would resign, starting the process of finding a new prime minister by next week.

A survey published overnight showed consumer confidence remained close to a record low as households responded to the combination of high inflation and Britain’s chaotic politics.

The ONS said it was unable to estimate the extent of the impact of the queen’s funeral on the retail sales figures.

“The decline in sales volumes in most major categories suggests that high inflation is still weighing heavily on spending,” Ruth Gregory, an economist with Capital Economics, a consultancy, said.

Several retailers, including Britain’s biggest supermarket group Tesco and online fashion seller ASOS, have warned about the profit outlook this month as they face higher energy and staff costs, and a weak pound.

In annual terms, total sales volumes were down 6.9 per cent, the ONS said.