UK consumers cut back their spending last month, official figures confirmed today, adding to doubts about the strength of the country’s economic recovery.
Between September and October 2012 the quantity of goods bought in the UK retail sector fell by an estimated 0.8%, in particular due to lower spending on food and clothing, the Office for National Statistics (ONS) reported today. Economists had predicted a smaller decrease of 0.2%.
This monthly decline followed a 0.6% rise in retail sales the previous month.
Retail sales grew by 0.6% in October 2012 compared to the same month in 2011. The ONS noted that, although year-on-year growth has been seen in the retail sector since August 2011, the long-term pattern for the retail sector as a whole has been relatively flat between 2007 and 2012.
The British Retail Consortium (BRC) said that the October figures are “deeply worrying this close to Christmas”.
BRC director general Stephen Robertson pointed out that consumer confidence dropped to a six-month low in October, leading to sales growth almost grinding to a halt at a critical point. Retailers will be hoping that the feelgood factor ahead of Christmas translates into much stronger figures next month, he added.
Sir Mervyn King, Governor of the Bank of England, has warned that the economy could shrink again in the fourth quarter. The UK only emerged from its douple-dip recession in the third quarter, when GDP grew by 1%.
Yesterday the Bank of England lowered its growth forecast for 2013 to 1%, saying that the UK faced a slow recovery after emerging from nine months in recession.
And new figures released today by Eurostat show that the UK’s largest trading partner, the eurozone, fell back into recession in the third quarter. The economy of the 17 euro members contracted by 0.1% between July and September, after declining by 0.2% in the previous three months.