British Retail Sales Update

LONDON (Reuters) – British retailers reported the fastest growth in sales since May this month and see a further modest expansion for October, the Confederation of British Industry (CBI) said on Friday. This contrasts with other more downbeat surveys of consumer sentiment.

The CBI stated that its monthly retail sales balance rose to +4 in September from -27 in August. Retailers' expectations for the month ahead improved from -17 to +5, marking their strongest outlook since April 2023.

Despite this, retailers believe that sales are still below the normal levels expected for this time of year.

CBI Principal Economist Martin Sartorius noted, "While some firms within the retail sector are beginning to see tailwinds from rising household incomes, others report that consumer spending habits are still being affected by the increase in prices over the last few years."

Earlier this week, Megan Greene, a member of the Bank of England Monetary Policy Committee, suggested that consumer spending might rebound more strongly than expected, even though it remains below pre-pandemic levels. This comes in light of a recent recovery in household incomes.

However, consumer surveys by both GfK and the British Retail Consortium indicate that many households are still cautious due to high inflation in 2022 and 2023, along with concerns about possible tax increases in the new Labour government's first budget, scheduled for Oct. 30.