UK Monthly Retail Sales – Raised Inflation supports total Growth in September

KEY POINTS

  • Raised inflation coupled with sustained real-terms growth led to a 4.6% year-over-year uplift in UK retail sales in September 2017.
  • Strong year-over-year increases at clothing specialists, health and beauty stores, and Internet pure plays underpinned total growth.

Retail in detail

UK retail sales grew by 4.6% year over year in September, comprising 1.6 % real-terms growth and a 3.0 % rise in prices. Total growth decelerated from 5.6 % in August, and real-terms growth slowed from 2.6 % in August. Despite this slowing, total growth remains solid and supports our forecast for an increase in total retail sales of around 5 % this holiday season.

 

Grocery stores reported unusually sluggish growth of 1.3 % in September, driven solely by inflation, with sales falling by 1.4 % year over year in real terms. Kantar Worldpanel recently reported significantly stronger total growth, of 3.0%, for the grocery sector in the four weeks ended October 8.

Clothing specialists’ growth was again supported by a seemingly improbable leap in sales by small retailers. The ONS reported that small retailers enjoyed a 39.3 % year-over-year jump in sales in September. Nevertheless, large clothing chains, whose performance we think is more reflective of the total sector, also saw strong growth in the month, with sales up 7.2 %. Inflation at clothing and footwear stores moderated to 3.3 % in September from 4.2 % in August.

Online Retail Sales

Total Internet retail sales were up 14.1 % in September, versus an increase of 18.0 % in August. In September, online sales grew by 9.5 % at food retailers, by 8.7 % at department stores/mixed-goods retailers, by 40.1 % at clothing and footwear specialists, and by 5.0 % at household goods stores (such as furniture and DIY retailers).

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