Retail sales fall faster than expected ahead of Budget

Retail sales experienced a sharper decline than anticipated in September, as consumer confidence took a significant hit prior to the UK Budget. The Office for National Statistics reported a 0.4% drop in total sales at retailers, surpassing the 0.1% decline forecasted by economists. The slowdown was primarily attributed to a decrease in non-food stores and online spending, with volumes falling by 0.4%.

Non-essential purchases saw reduced sales and footfall as customers tightened their belts. This comes amidst a major drop in UK consumer confidence, with the GfK consumer confidence index plummeting 11 points to -24 in September. Experts warn that October may see a further decline in consumer confidence and retail sales, as households face tougher times just before the crucial festive season for retailers.

Retailers are bracing for the Budget, with concerns over inflation, rising interest rates, and potential tax cuts. Industry leaders have called for tax exemptions for high street shops and reductions in employer national insurance contributions. Automotive fuel was the only sector to show growth in September, despite higher fuel prices driven by the US-Iran conflict. The average price of diesel reached a record high of £2.01 per litre in early October.