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The UK Retail Sales is concluding the third quarter on a somber note. Stubborn inflationary pressures persisted throughout September, paired with subdued wage growth, collectively painting a disheartening economic panorama.
In September, retail sales in the UK experienced a 0.9% decline, following a modest 0.4% upswing in August.
Furthermore, retail sales, excluding fuel, witnessed a more substantial contraction of 1.0%, diverging from the 0.6% upturn observed in August.
These figures deviated from earlier economist predictions, which had foreseen a milder 0.2% downturn in retail sales and a 0.4% contraction in retail sales, excluding fuel.
UK Retail sales data
The larger-than-anticipated slump in retail sales amplifies apprehensions concerning an impending economic recession.
An elevated interest rate environment has wrought repercussions on both the housing market and consumer sentiment.
Inflationary pressures with sluggish wage growth and the persisting predicaments of the housing sector, portend attenuation in consumer expenditure.
It is important to underscore that private consumption in the UK plays a pivotal role, constituting over 60% of the national economy.
The retail sales report figures may ease the need for the Bank of England to raise interest rates. As weaker wage growth could reduce consumer spending and help control inflation.
GBP/USD Response to the UK Retail Sales Report
Preceding the release of the UK retail sales report, the GBP/USD exchange rate ascended to $1.21459 before subsequently receding to $1.21178.
In reaction to the retail sales data, the GBP/USD exchange rate initially surged to $1.21281, only to later regress to $1.21088.
As of this morning, the GBP/USD exchange rate displayed a decrement of 0.24%, resting at $1.21140.
For more details Read: GBP/USD Surges on October 19, 2023, as Fed Chairman’s Comments Weigh on US Dollar – Tradingcompass
Sector-Specific Sales Contractions
Depending of the UK Retail Sales the aggregate sales volumes within non-food stores exhibited 1.9% reduction in September, following a modest 0.3% expansion in August 2023.
That include encompassing department stores, clothing retailers, household goods establishments, and other non-food vendors
Household goods stores suffered a pronounced 2.3% monthly decline in sales volumes in September.
That attributed to contractions in furniture and lighting store sales.
Also eflecting the ongoing challenges consumers face in coping with escalating living costs.
The sub-sector of other non-food stores noted a discernible 2.0% downturn in September 2023.
That Primarily driven by contractions in sales within watch and jewelry establishments, as consumer willingness to spend appeared to be subdued in the current economic climate.
Sales volumes within clothing stores contracted by 1.6% in September. as warm weather adversely impacted the sales of autumn-appropriate attire.
Department stores mirrored a similar 1.6% reduction in sales volumes during September, with tepid sales of new season clothing.
Conversely, food stores reported a 0.2% expansion in sales volumes in September 2023, following a 1.4% upswing in August 2023.
But evaluating the quarterly performance, sales volumes within the three months leading up to September 2023 contracted by 1.3% in contrast to the preceding three months.
Compared to the pre-pandemic benchmark of February 2020, food store sales volumes demonstrated a decrement of 3.7%.
Online retail spending values observed a 1.3% decline from August to September 2023, principally driven by contractions in non-store retailing, other non-food stores, and establishments dealing in textiles, clothing, and footwear.
The proportion of online sales receded from 27.0% in August 2023 to 26.7% in September 2023, with the monthly decline in online retail value surpassing that of overall retail value.
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Disclaimer:
Please note that this article serves solely for informational purposes. As such, it is not financial advice. We strongly advise readers to conduct thorough research and consult with financial professionals before making any investment decisions.
