Weak sales pose threat to retail’s Christmas cheer

 
Helen Cahill
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Retailers have been gearing up to Christmas for months (Source: Getty)

The retail industry was hit with weak sales in October, and experts are warning the poor performance could be a bad omen for the crucial Christmas shopping period.

UK retail sales fell by one per cent on a like-for-like basis in October, down from a growth of 1.7 per cent at the same point last year, according to figures released today by the British Retail Consortium (BRC).

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Shoppers were forced to divert their funds away from non-essential items as inflation pushed up the price of groceries.

Over the three months to October, store sales of non-food items slumped 2.9 per cent on a like-for-like basis. Meanwhile, food sales climbed 2.4 per cent.

BRC chief executive Helen Dickinson said total growth was at its lowest level since May, which will be a "cause for concern" for retailers as they prepare for Black Friday and Christmas.

Richard Lim, chief executive of Retail Economics, said: "These feeble results are likely to set the tone for the final quarter of the year as the pinch on personal finances intensifies and households contemplate the impact of rising interest rates.

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"With real earnings expected to remain in negative territory until the middle of next year, the trading environment for retailers in the coming months is expected to be very challenging."

Barclaycard's spending figures for October found spending growth slowed to 2.4 per cent, which, with inflation at three per cent, equated to a contraction in real terms.

Paul Lockstone, managing director at Barclaycard, said:

This is a reflection of consumers paring back to cope with their reduced spending power, a tactic which, for the moment, has given them confidence in their ability to manage their household finances.

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