Pound drops after retail sales fall at fastest rate since financial crisis

Helen Cahill
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Orders to suppliers also fell (Source: Getty)

The pound has fallen this morning after data revealed retail sales dropped sharply in the year to October.

The Confederation of British Industry's (CBI) distributive trades survey found retail sales fell at the fastest rate since March 2009, when the financial crisis was at its height. Half of retailers surveyed said volumes were down on last year.

At time of writing the pound was down 29 per cent against the dollar at $1.3224.

Read more: Retail jobs crunch: Workers feel the pinch as rising costs lead to job cuts

Orders to suppliers also dropped at the fastest rate since March 2009, the CBI said. Next month, sales volumes are expected to stabilise.

(Source: Pantheon Macroeconomics)

Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said the figures were "extremely weak".

"The survey, however, often is misleading; it signalled a surge in the official measure of retail sales, excluding petrol, in September, when year-over-year growth actually slowed to 1.6 per cent, from 2.6 per cent in August," he said.

"The survey often is a poor guide because it includes only 49 retailers reporting whether sales are higher or lower than a year ago solely in the first two weeks of the month."

Rain Newton-Smith, CBI chief economist, said: "It's clear retailers are beginning to really feel the pinch from higher inflation. While retail sales can be volatile from month-to-month, the steep drop in sales in October echoes other recent data pointing to a marked softening in consumer demand."

She said that the government could help retailers, who employ around 3m people in the UK, by switching its indexation of business rates from RPI to CPI.

The data comes after figures from the British Retail Consortium (BRC) found retail employment dropped three per cent in the three months to September. The trade body, along with the CBI and others, have written to the chancellor to demand action on business rates in the Autumn Budget to ease the rising costs faced by the sector.

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