Fall in retail sales much higher than expected - ITEM Club
Nida Ali, economic advisor to the EY ITEM Club, comments on today’s retail sales figures:
- A discouraging start to the fourth quarter - fall in retail sales was higher than expected
- Higher inflation in the near-term might stall sales growth temporarily
- But further out conditions for UK retailers are likely to ease
“A discouraging start to the fourth quarter. Although some payback in October was always likely, given that temporary factors had boosted sales in recent months, a fall of 0.8% is much higher than expected. This doesn’t bode well for growth in Q4 and supports our view that GDP will probably remain flat, at best.
“Today's figures represent a setback, given that retail sales held up reasonably well in recent months. Employment has remained strong, while inflation is a lot lower than the same time last year. Inflation is likely to stay elevated in the near-term due to higher food and energy prices, which might affect sales growth in the near-term. But further out conditions for UK retailers are expected to ease.”