UK retail sales rebound but remain below pre-COVID levels

Shoppers carry bags from Primark. UK retail sales are still below pre-COVID levels
UK retail sales: Compared to October 2021, consumers bought 6.1% less and had to spend 4.8% more due to soaring inflation. Photo: Phil Noble/Reuters

UK retail sales rebounded in October but still remain 0.6% below their pre-pandemic levels amid the sharpest cost of living crisis in a century.

According to the Office for National Statistics (ONS) on Friday, excluding fuel sales, the volume of goods sold in shops and online rose by 0.6% during the month, driven by clothing which was up 2.5%. Sales were also buoyed by increases at second-hand stores and auctioning houses.

This came after a 1.5% drop the month before, when the UK went through a period of national mourning, and shops were closed for the funeral of Queen Elizabeth II.

But compared to October 2021, consumers bought 6.1% less and had to spend 4.8% more due to soaring inflation. Inflation hit 11.1% in the year to October, the highest for 41 years.

Read more: From income tax to pensions: What Jeremy Hunt's Autumn statement means for you

Sales volumes at shops across Britain shrank by 2.4% over the last three months. Food store sales volumes fell by 1%, with shopping baskets getting smaller, and were 4.1% below their pre-COVID levels of February 2020 — as some people were unable to afford as much.

“Food sales volumes have followed a downward trend since summer 2021 following the lifting of restrictions on hospitality,” the ONS said.

“In recent months, supermarkets have highlighted that they are seeing a decline in volumes sold because of increased cost of living and food prices.”

Pantheon Macroeconomics suggested the October sales increase was merely a "flash dawn" caused by the reopening of stores after the Queen's funeral.

Watch: How does inflation affect interest rates?

Kevin Bright, global leader of McKinsey’s consumer pricing practice, also said: “The slight uptick in October spend should not be a source of optimism, as it is well within the monthly volatility of this overall downward trend in retail spend.

“The decrease that we see in the food sales in October, are likely to be mirrored in non-food categories.”

He added: “Our latest consumer research shows that UK consumers intend to spend significantly less on certain non-food categories. 52% of consumers say they plan to spend less over the next three months on footwear and consumer electronics and 50% say they will spend less on apparel.”

Meanwhile, Lynda Petherick, head of retail at Accenture in the UK and Ireland, said retailers face a difficult Christmas ahead.

“Despite Black Friday coming up next week, it’s unlikely that retailers will be in celebration mode as we head into the festive season this year,” she said.

Read more: FTSE rises as traders digest autumn budget aftermath

“Rising inflation and the fall in real wages will only be adding to the sense of unease over whether this will be a “golden quarter” after all.”

Double digit inflation, coupled with rising taxes and interest rates, mean living standards are on course for the biggest drop on record according to the Office for Budget Responsibility (OBR), reducing consumer spending power.

Watch: How to save money on a low income?