Commenting on October’s ONS retail sales data, Andrew Sentance, senior economic adviser at PwC, said:
"October's retail sales figures show a mixed picture in terms of the trend in spending growth. In the past three months, sales volumes were just 1.1 % up on a year ago - the lowest rate of annual increase since the spring of 2013.
“But this disappointing performance mainly reflects weakness in retail sales earlier this year. In the past six months, sales volumes have been on a gently rising trend. Retailers will be hoping that this pattern of improvement continues into the crucial Christmas sales season.
"Inflation has been the main dampening factor on retail sales over the past year - and the price of goods sold by retailers in October were, on average, 3.1 percent up on a year ago and slightly ahead of the CPI inflation figure of 3.0 percent. We cannot be sure yet that the upward pressure on inflation from the weakness of the pound has fully worked its way through the system. But we are probably close to the inflation peak and, as we move through next year, easing price pressures are likely to help the growth of retail sales.
"Sluggish consumer spending has been a key factor in moderating UK economic growth. As a result, the UK economy has seen a slowdown when most other economies in the western world have been speeding up. Our GDP growth of 1.5% over the past twelve months is the weakest performance of the major economies in Europe and North America.
“With uncertainty about Brexit also curbing investment, we should expect subdued UK economic growth to continue into next year."
Lisa Hooker, consumer markets leader at PwC, said:
“After a strong September, October’s retail sales growth slowed, particularly in comparison to a strong October last year. Unseasonably warm weather and Storms Brian and Ophelia coinciding with half-term saw some shoppers temporarily stay away from the high street, impacting footfall and sales of non-food items - particularly new season clothing lines.”
“We expect stronger retail sales in November, as many retailers have waited until after Halloween to kick start their Black Friday and Christmas campaigns. Our recent research also shows that 3 in 5 consumers will start their Christmas shopping later this year so, despite a lacklustre October, UK retailers have everything to play for in the critical two months leading up to Christmas.
“We are optimistic about retailers’ prospects in the final two months of the year, as consumer sentiment remains resilient, and is particularly strong amongst younger shoppers. We do not expect the recent rise in interest rates to affect people’s shopping habits in the short term, and Black Friday sales followed by December Christmas shopping should be a welcome boost for UK retailers.”
At PwC, our purpose is to build trust in society and solve important problems. We’re a network of firms in 157 countries with more than 223,000 people who are committed to delivering quality in assurance, advisory and tax services. Find out more and tell us what matters to you by visiting us at www.pwc.com.
PwC refers to the PwC network and/or one or more of its member firms, each of which is a separate legal entity. Please see www.pwc.com/structure for further details. © 2017 PwC. All rights reserved