Retail sales rocket on thrills and chills in October, ONS finds

UK retail sales in October rose by the most in 14 years, official figures released on Thursday showed, as cooler weather helped drive winter clothing sales and grocers enjoyed a thrilling Halloween.

The volume of retail sales in October rose 7.4% over the same period last year, the Office for National Statistics said, up from the revised 4.2% gain the month before and beating of the 5.3% consensus forecast.

Month-on-month, sales in October increased 1.9% on September's, well ahead of the 0.4% expected and up from the 0.1% a month ago.

Gains were made by all store types, except department stores, the ONS said, with the largest contribution to growth coming from textiles, clothing and footwear stores.

Excluding car sales, retail sales were up 7.6% on last year and 2.0% on the previous month.

ONS senior statistician Kate Davies said the strong figures were boosted by several factors.

"Cooler temperatures in October boosted clothing sales as shoppers took their cue to purchase winter clothing, while the supermarkets benefitted from Halloween. This has also coincided with the strongest growth in internet sales seen for five years," she said.

While the retail sales figures provided further evidence that shoppers remain undeterred by the Brexit vote, economist Paul Hollingsworth at Capital Economics said he doubted that high-street spending will maintain this pace.

"After all, this week’s labour market figures highlighted that wage growth remains weak. Moreover, despite the slight dip in inflation in October, it still looks set to breach the MPC’s 2% inflation target in spring next year, and will end the year closer to 3%. Accordingly, the squeeze in real income growth is yet to come."

"That said, with interest rates remaining low, and the chancellor set to ease the planned fiscal squeeze considerably at next week’s Autumn Statement, we don’t think that spending growth is on the cusp of a dramatic slowdown."

Howard Archer at IHS Markit said the level of consumer spending will be the key issue for the UK economy in the fourth quarter, with clouds on the horizon but current support from decent fundamentals in the shape of purchasing power and high employment.

"Retailers will clearly be hoping that consumers’ willingness to spend remains high over the vital Christmas shopping period. The latest Gfk consumer confidence survey indicates that consumer confidence fell back modestly in October after rebounding strongly in September and August from July’s sharp losses that occurred in the aftermath of June’s vote for Brexit."

With consumer confidence seemingly shaken by sterling’s sharp drop, Archer suggested the near-term may see some consumers bring forward purchases of big-ticket items in the belief that their prices are likely to rise appreciably over the coming months.

That could make Black Friday a big one this year. IMRG has forecast £6.77bn will be spent in the UK over the Black Friday week of 21–28 November, but the sector has found in recent years that this merely brings forward some festive spending.