British Retail Sales Update

LONDON (Reuters) – British retailers reported the fastest growth in sales since May this month, anticipating further modest expansion for October, according to the Confederation of British Industry (CBI).

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

Despite the positive trends, retailers noted that sales remain below normal levels for this time of year.

“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,” said CBI Principal Economist Martin Sartorius.

Earlier this week, Bank of England Monetary Policy Committee member Megan Greene indicated a possibility that consumer spending may rebound more robustly than expected, as it remains beneath pre-pandemic levels despite a recent uptick in household incomes.

However, surveys by GfK and the British Retail Consortium show that many households are still cautious due to high inflation in 2022 and 2023, along with concerns about potential tax increases in the new Labour government’s first budget on October 30.