📖 Your Q2 Earnings Guide: Discover the Stocks ProPicks AI Highlights to Jump Post-EarningsRead more

U.K. Retail Sales Fell 1.6% in August as Slowdown Intensifies

Published 16/09/2022, 07:48
© Reuters.

By Geoffrey Smith

Investing.com -- U.K. retail sales posted their sharpest fall of the year so far in August, dropping 1.6% as the cost-of-living crisis more than offset some modest relief from fuel prices in the month.

The Office for National Statistics said sales volumes were down 5.4% from a year earlier, after all major categories of retailers posted declines in August.

The figures were well below analysts' expectations for a drop of 0.5% on the month and 4.2% on the year and add to a picture of an economy sliding quickly into recession, as the surge in household energy bills and increasingly broad price increases hit consumers' wallets.

"While the drop in retail sales in August was larger than most anticipated, it was pretty unsurprising given the low level of consumers' confidence," tweeted Gabriella Dickens, an analyst with Pantheon Macroeconomics. She argued that the weakness "will help tip the balance" toward a smaller interest rate increase at the Bank of England's policy meeting next Thursday. Dickens expects the Monetary Policy Committee to raise rates by half a percent, rather than the 75 basis point move expected by markets.

The prospect of the Bank of England slowing down the pace of monetary tightening undermined the pound on the foreign exchange markets. It fell briefly to a new 37-year low of $1.1408 before paring its losses to trade at $1.1427 by 04:10 ET (08:10 GMT).

Food store sales volumes fell 0.8%, while non-food sales fell 1.9% and fuel sales volumes fell 1.9%. Fuel sales are now down 9% from their level before Russia's invasion of Ukraine, which sent prices for all energy products skyrocketing.

The U.K.'s data differ from U.S. retail sales data in that they exclude the hospitality sector. As such, they are more sensitive to the recovery in spending on hospitality that has followed the lifting of Covid-19 restrictions earlier this year.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.