UK retail sales in September fell more than expected, and consumer confidence dropped sharply in October

According to Smart Finance APP, UK retail sales declined in September, as consumers reduced their food purchases and higher-than-usual temperatures dampened demand for autumn clothing. The Office for National Statistics (ONS) reported on Friday that the total volume of goods sold online and in stores fell by 0.4%, whereas economists had previously expected a 0.1% decrease. The figure for August was revised up to a 0.7% increase.

Overall sales grew by 0.7% in the third quarter, contributing 0.03 percentage points to overall economic growth. UK consumers, who account for about 60% of economic activity, had previously proved more resilient to the “Iran shock” than expected—summer spending was boosted by political optimism and the World Cup football tournament.

However, a survey released earlier on Friday showed that consumer confidence fell sharply this month, further indicating that they are starting to feel the pressure. Before this downturn, diesel prices hit a record £2 per litre and mortgage rates neared 6%. Meanwhile, the British public is bracing for a surge in energy bills at the start of the new year—a hike expected to push inflation above 4% and force the Bank of England to consider raising interest rates as early as November.

Chancellor John Healey has stated that he plans to announce a new round of cost-of-living support measures in next week's budget. However, given the state of public finances, there is little room to offer large-scale concessions.