Retail sales in Great Britain fell for the first time in three months in October, as consumers held back on spending before the first Labour budget in 14 years.
The Office for National Statistics (ONS) said sales fell by 0.7% month on month in October – and revised down the growth figure for September from 0.3% to just 0.1%. Clothing stores in particular bore the brunt of consumers tightening the purse strings last month.
The chancellor, Rachel Reeves, had warned the public to be braced for tax increases in the budget on 30 October, but it was businesses that were particularly hit. Retailers said the rise in the rate of employers’ national insurance contributions would add £7bn to their costs.
The ONS said that on a quarterly basis – a better guide to the underlying trend than a single month’s figures – sales volumes rose 0.8% in the three months to the end of October compared with the previous quarter. In the year to October 2024, sales volumes were up 2.4%.
“Retail sales fell back in October following three months of growth,” said Hannah Finselbach, a senior statistician at the ONS. “The fall was driven by a notably poor month for clothing stores, but retailers across the board reported consumers held back on spending ahead of the budget.”
Sales at clothing and footwear stores fell 3.1% in October, the largest decline of any category, with other non-food store sales down 1.4%.
The ONS said previous growth clothing sales in recent months was fuelled by end of season sales and good weather enticing consumers to shop.
Non-food stores – a combination of department stores, clothing, household and other non-food stores retailers – fell by 1.4%. Sales at supermarkets and food stores decreased by 0.6%.
The weaker-than-expected overall retail sales figures sent the pound to a six-month low against the US dollar. Sterling fell as low as $1.255, its weakest level since 14 May, extending recent losses as economic worries have risen.
“A fall in sales in October does not bode well for the retail industry, as this month typically marks the start of the festive shopping season,” said Greg Zakowicz, a senior e-commerce expert at Omnisend. “Retailers large and small will be looking at today’s figures and hoping that it is not a sign of things to come.”
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The only sectors where sales grew were household goods, a rise 0.1%, and fuel sales, an increase of 0.6%.
Asif Aziz, the retail director at the mobile phone operator EE, suggested that discount sales events and upcoming Christmas spending may also have held back spending.
“October has been a quiet month on the high street with shoppers clearly keeping their powder dry ahead of Black Friday sales,” he said. “Uncertainty around the budget will have also fostered a save now, spend tomorrow mindset, as consumers start to factor in increased expenditure in the run-up to Christmas.”