UK Retail Sales Shrink 0.4% in September Despite Quarterly Growth

Key Facts

UK retail sales volumes fell 0.4% in September compared with August, exceeding economists’ forecast of a 0.1% decline, LBC reported, citing the Press Association. The data measure the volume of goods sold, not the value of consumer spending directly. The reading followed a 0.7% rise in volumes in August and a 0.4% fall in July. The August estimate was revised up to 0.7% from 0.5% in the latest data release. The monthly figures therefore showed weakness in September, even as the three-month comparison remained positive.

In the three months ending in September, retail sales volumes rose 0.7% compared with the previous three months, according to data reported by LBC, citing the Press Association. The Office for National Statistics attributed part of this growth to fuel sales. Food and drink sales also contributed to the quarterly increase, helped by warm weather and the World Cup, but fell slightly in September. These details highlight the difference between the weaker monthly reading and the still-positive quarterly total. The drivers of quarterly growth also did not all continue at the same pace in the final month.

September’s weak retail sales coincided with consumer price inflation accelerating to 3.5% year on year, from 3.1% in August, according to the Office for National Statistics. On a monthly basis, the Consumer Prices Index rose 0.4% in September. The office said transport, particularly motor fuel, made the largest upward contribution to annual inflation. Motor fuel prices rose 29.8% in the 12 months to September. This placed fuel at the heart of the price environment facing consumers, as retail sales volumes fell in the same month.

A British Chambers of Commerce survey published on 24 September had shown a broader deterioration in the annual retail sales trend: the weighted balance fell to -55% in September from -48% in August. Companies surveyed expected the rate of decline to slow to -37% the following month, while remaining rapid. The group’s chief economist said some companies attributed the deterioration to “weak consumer confidence.” He added that continued sales declines “appear to have prompted retailers to cut order volumes at a record pace in the survey.” The findings provide a survey of business trends alongside the statistics office’s measure of actual sales volumes.

In London markets, the FTSE 100 fell 0.5% to 10,699.33 points by 10:06 GMT on 22 October, weighed by bank shares and rising oil, Reuters reported via Investing.com. Oil prices jumped more than 3% to their highest levels since May, with Brent crude trading above 112 dollars a barrel; energy stocks were the session’s biggest gainers, the same source reported. In the previous session, the index ended trading on 21 October up 0.1% at 10,752.88 points, supported by oil companies. But Reuters, via MarketScreener, reported that stronger-than-expected inflation data boosted expectations of an interest rate increase and capped gains. These readings describe market moves on 21 and 22 October and do not establish that they were caused by the retail sales data published for September.

Attention now turns to the UK budget, which the Treasury confirmed will be presented on Wednesday 28 October 2026. The department said this would be the Chancellor’s first budget, formally setting its date. The timing follows the British Chambers of Commerce survey, which recorded a decline in annual sales and weak consumer confidence, and September data showing a monthly contraction in sales volumes. The budget will be the next political milestone in this context, while the available evidence does not include a confirmed date for the publication of the British Chambers of Commerce’s October survey.