Retail sales slip back in September as prices rise

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Non-food sales volumes were the main culprit for September's fall, showing a 0.6% month on month fall.

Figures yesterday showed that United Kingdom retail sales volumes fell 0.8% in September, reversing a jump in August and undershooting all economists' forecasts in a Reuters poll.

United Kingdom retail sales fell more than expected last month, official figures confirmed on Thursday, further muddying the waters over whether the Bank of England will hike interest rates next month.

Despite weak monthly growth in British retail sales figures revealed on Thursday, the quarterly figures are buoyant, pointing to a possible rise in the bank rate in the coming months.

The data is not encouraging and sends out alarm bells for sterling, they added.

Average annual wage growth slowed to 2.1% in the same period, down from the revised figure of 2.2% in the three months through July.

"Although September's retail sales figures were far weaker than expected, growth still maintained a fairly reasonable pace over Q3 as a whole", Ruth Gregory, UK economist with London-based data analysis firm Capital Economics, told Xinhua.

Consumer prices rose in September at their fastest annual rate for more than five years, registering the eighth consecutive month of above-target inflation.

It was the first monthly fall since May and fuelled speculation that a bounce seen over the summer may have been boosted by the weakness of the pound encouraging more tourists to come to Britain and fewer Britons to go on holiday overseas. This has given the pound a bit of a bloody nose on the currency markets, with investors scaling back their expectations of a rate rise from the Bank of England. "On top of that the Bank could well find its credibility compromised if it fails to follow through on its recent hawkish commentary, and would once again be on the hook for providing "forward misguidance".

"On one side, inflation is eating consumer's purchasing power, and in the other side, activity is slowing down in the retail sector".

A member of the monetary policy committee has said he does not see any sustained upward inflation and is unlikely to vote for a rate hike in November.

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