U.K. Retail Sales Drop With ‘Stark Slowdown’ for Food Stores

(Bloomberg) -- U.K. retail sales fell more than economists forecast last month as food spending slumped the most in almost three years.

Overall sales dropped 0.8 percent from August, compared with a median estimate of a 0.4 percent decline in a Bloomberg survey, according to data from the Office for National Statistics in London. Excluding auto fuel, sales also fell 0.8 percent.

U.K. Retail Sales Drop With ‘Stark Slowdown’ for Food Stores

The drop comes after a strong summer for U.K. retailers as the hot weather encouraged Britons to splash out. Food store sales tumbled 1.5 percent last month -- the most since October 2015 -- in what the ONS called a “stark slowdown.” The pound was little changed after the data, trading at $1.3111 as of 9:35 a.m. London time.

Still, the longer term trend is more positive. Overall retail sales climbed an annual 1.2 percent in the third quarter, driven by jewelry and watches and web-based stores. In September alone, spending online jumped 11 percent from a year earlier, the ONS said.

The Bank of England raised interest rates on Aug. 2 to the highest level in almost a decade on concern that domestic inflation pressures are building. A report yesterday showed consumer price growth slowed more than expected last month, to 2.4 percent, providing further evidence that a pay squeeze on consumers is abating.

From a year ago, retail sales increased 3 percent in September. Excluding fuel, annual growth was 3.2 percent.

The sector contributed 0.06 percentage points to third quarter gross domestic product, the ONS said.

©2018 Bloomberg L.P.