U.K. retail sales fell the most in seven months in October, indicating continued caution among consumers just weeks before the crucial Christmas shopping season.
The British Retail Consortium said sales fell 1 percent on a like-for-like basis and were up just 0.2 percent in total terms. In a separate report, Barclaycard said annual growth in household spending slowed to 2.4 percent last month from 3 percent in September, the weakest in more than a year.
Faster inflation and sluggish wage growth has meant falling real incomes for U.K. workers, allowing them to buy less in Britain’s high streets and malls. Retail stocks have underperformed the broader market this year, and Next Plc Chief Executive Officer Simon Wolfson said last week that consumer behavior is “subdued.”
Bank of England Governor Mark Carney said last week that while household finances have been “difficult” this year, “the worst of that real-income squeeze is ending.” In addition to expecting inflation to peak this month, he also forecasts a pickup in wage growth.
But the latest numbers suggest households remain reluctant to spend on non-essentials given the high level of uncertainty that Brexit creates for the outlook. The BRC said that in the three months through October, nominal food sales increased 2.4 percent on a like-for-like basis, buoyed by inflation, while non-food sales fell 0.4 percent.