Recession fears mount as UK retail sales fall more than expected amid spending squeeze

High streets and supermarkets suffered another sales slump last month as retailers were impacted by the cost-of-living crisis and closures for the Queen’s state funeral.

New official figures revealed that UK retail sales volumes fell by 1.4 per cent in September. It follows a 1.7 per cent decline in August. The latest result was notably worse than expected, after a consensus of economists predicted retail sales would dip by 0.5 per cent for the month.

The Office for National Statistics (ONS) said food stores saw sales drop, sliding by 1.8 per cent in September, continuing a downward trend since summer last year when pandemic restrictions were eased on hospitality. It came amid a 14.5 per cent jump in food prices in September - the biggest increase recorded since 1980, according to data modelling. Earlier this week, the Scottish Retail Consortium (SRC) said total sales north of the Border edged up just 0.8 per cent last month, compared with September last year and when adjusted for the effects of spiralling inflation.

ONS director of economic statistics Darren Morgan said: “Retail sales continued to fall in September after a weak August, and consumers are now buying less than before the pandemic. Drops were seen across all main areas of retailing, with falling sales in food stores making the largest contribution. Retailers told us that the fall in September was partly because many stores were closed for the Queen’s funeral, but also because of continued price pressures leading consumers to be careful about spending.”

Danni Hewson, financial analyst at investment firm AJ Bell, noted: “A pound just isn’t stretching as far as it used to and while people have traded down, switched from brands to value lines, it’s a switch they can only make once. Food stores in particular have commented that shoppers are simply having to pay more to buy less. After Covid we were asked to spend our way out of recession, that’s simply not going to be an option during the new recession the country is stumbling towards. Cutbacks are happening across the whole retail landscape and September figures fell more than had been expected.”