UK retail sales volumes fall sharply in August
By Alexander Bueso
Date: Friday 16 Sep 2022
(Sharecast News) - Retail sales fell sharply last month hit by rising prices and the ensuing cost-of-living crisis.
According to the Office for National Statistics, in seasonally-adjusted terms, total retail sales volumes in the UK fell at a month-on-month pace of 1.6% in August (consensus: -1.4%), following a rise of 0.4% in July.
It was a similar story in year-on-year terms with sales down by 5.4%, versus a 3.4% decline in July (consensus: -3.7%).
Gabriella Dickens, senior UK economist at Pantheon Macroeconomics, linked the drop in sales to the "extremely low" level of consumer confidence, adding that it should steer the Monetary Policy Committee towards a 50bp hike in Bank Rate.
That was in contrast to the 75bp hike seen as most likely by financial markets.
Furthermore, "weakness likely won't be sustained, given the additional support from the government," Dickens said.
Non-food store sales fell by 1.9% on the month, those at food stores by 0.8% and non-store sales by 2.6%.
The drop in food sales suggested Britons were tightening their belts in response to the surge in food prices, she added.
Automotive fuel sales volumes were down by 1.7% on the month.
"The fallout may be somewhat contained by the knowledge that support is coming in the shape of a huge GBP 100-150bn package capping utility bills. However, the cap will still mean the YoY increase in the OFGEM price cap of close to 100%, which will likely weigh further on consumer spending," chipped in Derek Halpenny, head of research, Global Markets, at MUFG Bank.
"GBP/USD has further to fall in circumstances of increased financial market volatility given the UK's budget + current account deficit combined is set to head toward an eye-watering 15% of GDP downside GBP pressure will persist."
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