Signs of early Christmas shopping as inflation spike threatens household budgets
By SEAMLESS DAILY
19 November 2021
Retail sales in Great Britain rose for the first time in six months in October as consumers started their Christmas shopping earlier than usual to avoid missing out if there was a shortage of goods.
Sales rose by 0.8 % in October, following no growth in September, according to the Office for National Statistics ( ONS ).
It said that fashion sales were just 0.5 % below pre-pandemic levels, adding that "some retailers ( were ) suggesting that early Christmas trading had boosted sales."
The figures are important as they are a big barometer of the economy, which is dominated by consumer spending in the UK.
Figures this week showed the rate of inflation hit its highest level for almost a decade in October- led by surging fuel and household energy costs.
The ONS figures were released as a closely-watched measure of consumer confidence edged up for the first time in four months, despite the leap in living costs.
"However, one highlight for both physical and virtual retail is the seven-point jump in major purchase intentions in the run-up to Black Friday and Christmas."
"October's rise in retail sales ends the unprecedented five-month run of falling sales, but the pick-up appears to reflect consumers purchasing Christmas presents earlier than usual due to warnings about product availability, rather than a sustainable improvement," he wrote.
"Clothing, department stores and toy shop sales reported a boost this month, with clothing stores reaching their highest level since the start of the pandemic, with some retailers suggesting that early Christmas shopping helped to bolster trade."
Clothing sales reached their highest level since the start of the pandemic, said the ONS.
Between August and September there was a fall in sales volumes in second-hand goods stores such as charity shops, auction houses and antique shops, but sales of expensive items at auction can make this data volatile, the ONS said.
Items that people were buying or pre-ordering earlier than usual for Christmas this year included toys and clothes, shoes and accessories.
ONS chief economist Grant Fitzner said : "After five months of no growth, retail sales picked up in October.
Although sales overall are above pre-pandemic levels, it remains a mixed picture.
Fuel sales fell sharply, returning to more normal levels after the fuel supply crisis in September, and food and online sales also dropped.
Head of the British Retail Consortium Helen Dickinson said retailers would be "relieved" at the improvement in sales having put in "a gargantuan effort".
Ms Dickinson said : "Labour shortages throughout the supply chains – from farms to distribution – are pushing up costs and creating some gaps on the shelves.
"nonetheless, retailers are prioritising christmas essentials, and many have laid out their festive offerings a little earlier to ensure everyone has time to buy treats and decorations before the big day," she said.
"Retailers are hopeful that demand will continue right through the golden quarter, however, challenges remain, with higher prices looming and many households facing rising energy bills."
Robin Osterley, chief executive of the Charity Retail Association, said like-for-like sales across the charity shop sector in October were between 3 % and 5 % higher than before the Covid pandemic- a "very significant" rise.
"They are looking to buy in the most cost effective way.
Separate figures from the ONS showed that government borrowing dipped last month as the economy continued to recover and the furlough scheme wound up.
Borrowing- the difference between its spending and tax income- stood at £18.8bn in October, £200m less than a year earlier.
The interest the government pays on what it borrows also jumped because of rising inflation.
The ONS said interest payments tripled in October from a year earlier to £5.6bn.
"will keep debt on a sustainable path in the years to come" he said.
Food sales volumes fell by 0.3 per cent but remain above pre-pandemic levels by 3.4 per cent.
ONS statisticians said non-food stores were the only main retail sector to see a rise in sales volumes in the last month, with charity shops, auction houses, toy stores, sports equipment stores and clothes stores all up.
With the return of more people to town and city centres, online sales as a proportion of overall retail sales fell to 27.3 %, the lowest level since the start of the pandemic.
'While retailers are putting in a gargantuan effort to ensure that essential food and gifts are ready for Christmas, they continue to be dogged by ongoing challenges supply chain problems.
'Decade-high levels of inflation, the prospect of interest rate rises and growing concerns about personal finances may trigger some to tighten their grip on spending just when the sector needs it the most.
Clothing in particular has led the recovery with sales up 6.2 percent.
Mr Jessop said : "The Government therefore needs to focus on supporting the economic recovery – which remains the best way to repair the public finances – rather than adding even more to the tax burden.
"The Bank of England also needs to ensure that a temporary increase in inflation does not become permanent.
However, higher levels of inflation and increased spending linked to the government's Covid-19 vaccination programme led to a weaker performance than expected in October.
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