Squeezed consumers caused retail sales to fall in October, official data showed today - although the decline was not as much as economists had feared.
Data from the Office for National Statistics showed year-on-year retail sales declined by 0.3 per cent in the year to October, against expectations of a 0.6 per cent fall. Excluding fuel, they crept up 0.1 per cent.
However, there were some positive signs: between September and October, sales increased 0.3 per cent, up from a 0.7 per cent decline between August and September. However, excluding fuel sales fell 0.3 per cent.
Despite the more optimistic showing than expected, economists suggested the figures showed consumers are continuing to feel squeezed.
“The consumer, which has provided the main engine of UK economic growth in recent years, is showing signs of running out of steam," said Chris Williamson, chief business economist at IHS Markit.
"Looking at the underlying trend, retail sales are falling at the fastest rate for seven years as households struggle with rising prices and subdued pay growth.
“The slowdown sends a warning shot to policymakers of the likely need to support the economy: consumers are pulling-back on spending at the same time as the country faces heightened uncertainty about the outlook as Article 50 is triggered."
The news came a day after official data showed wages grew 2.2 per cent in the three months to September, well below the UK's three per cent rate of inflation.
However, Richard Lim, chief executive of Retail Economics, suggested pressure may be close to easing.
“We expect inflation is nearing its peak and so the pinch on personal finances is at its most intense. Consumers are tightening their belts and these feeble results are likely to set the tone in the run-up to Christmas.
“What’s more, the first rise in interest rates in over 10 years will hit confidence before pay packets. Despite the Bank of England suggesting that interest rates will rise only very gradually, our research shows that almost half of consumers expect another rate hike in the next six months.”