October retail sales in Britain fell more than economists had expected, as people cut back on shopping for food and clothing as well as fuel.
Bloomberg reported Thursday that although sales were up in September by a revised 0.5%, October’s numbers went the other way, and by quite a bit more than economists had predicted. According to London’s Office of National Statistics, sales including fuel, which had been expected to fall by only 0.1%, instead registered a drop of 0.8%. Food sales alone, which make up about 41% of retail sales, contributed to that plunge by falling 0.6%.
Even though inflation is coming in above the Bank of England’s target of 2% and the bank’s Monetary Policy Council chose not to engage in another round of QE at its last meeting, Gov. Mervyn King said the policy council had not completely ruled out an additional round of QE in the future, should it be necessary, to boost growth.
“Today’s numbers aren’t terribly positive as far as the fourth-quarter gross domestic product goes,” said David Tinsley in the report. Tinsley, an economist at BNP Paribas in London, continued, “There is a reasonable chance that the fourth-quarter release will show the economy slipping backwards. That will raise the political heat for the government amidst talk of the economy triple dipping.”
Consumers in Britain have cut back heavily on clothing purchases, which make up approximately 12% of all retailing. After a school-uniform surge in September that had given a lift to the category of 1.9%, in October clothing sales fell 2.3%. However, year-over-year total retail sales were better, with October 2012 coming in 0.6% higher than October 2011.
If sales are down, prices are up. The annual retail sales deflator, which measures change in shop prices, increased to 0.9% for October from 0.7% for September. Food gained considerably more, with the deflator surging to 2.7% from 2%.