UK Retail Sales Plunge At Fastest Annual Pace In Eight Years
UK retail sales are falling at the fastest pace since the depths of the recession in 2009 and worries about the housing market could exacerbate the weakness in consumer spending seen this year.
The Confederation of British Industry said its measure of sales plunged to minus 36 in October - the lowest since March 2009 - from a positive 42 in September. Sales for the time of the year were slightly below the usual seasonal rates, it said.
Faster inflation has put the squeeze on shoppers this year, and a separate report on Thursday suggests a cooling housing market could further dampen consumers’ enthusiasm for spending.
YouGov and the Centre for Economics and Business Research said while their headline sentiment measure rose this month, confidence in the housing market weakened.
For Bank of England policy makers, all this may play into their thinking as they prepare for a crucial meeting next week. While they’ve signalled that an interest-rate increase may be needed soon, a rate hike - even a small one - could also have an impact on spending habits, particularly for those concerned about the cost of their mortgage.
Most UK property reports point to a property slowdown, with Halifax saying annual price growth has fallen to 4 % from 10% in early 2016. According to Acadata and LSL, London house prices may be falling at their fastest pace since the financial crisis.
“The downtick in the house value measures is a concern,” said Nina Skero, head of macroeconomics at the CEBR. “One’s perception of own home value has direct implications on their future willingness to spend.”
The CBI survey points to continued pressure on households from the mix of stronger price increase and sluggish wage growth.
Official data this month showed stores had their worst quarter in four years in the three months through September. The John Lewis Partnership, owner of Waitrose supermarkets and department store chain John Lewis, has seen sales growth slow by more than half this year.