Online retail sales fell at their sharpest pace on record this month, falling as people cut back on spending amid higher interest rates and an uncertain economic outlook.
Monthly internet sales fell to a weighted balance of -78 percent in the period through October, the biggest drop since 2009, and sharply down from the balance of -3 percent in September, according to the CBI, the employers’ lobby group.
The decline marks a marked reversal since households flocked to online shopping platforms in response to Covid-19 lockdowns that shuttered the high street.
Total retail sales fell in the year to October to a balance of -36 percent per year, the worst figure for that particular month since the CBI began measuring the data in the 1980s, and down from – 14 percent in the previous month.
The figures reflect gloomy official retail sales estimates published by the Office for National Statistics last week, which were -0.9 per cent lower than City analysts’ expectations in September. Consumer-facing businesses also indicated they expected retail sales, which have been negative for six months in a row, according to the CBI, to continue to contract during the winter months. Normally, a large part of the sector then generates the majority of its revenue.
Martin Sartorius, chief economist at the CBI, said: “As the festive period approaches, the retail sector remains in a perilous position. Sales volumes have fallen year-on-year for six months in a row as concerns about the cost of living and higher interest rates weigh on consumer spending. While slowing inflation should help shore up household incomes in the coming months, retailers will continue to face headwinds from higher energy and borrowing costs.”
Inflation has eased from a peak of 11.1 percent to 6.7 percent, but household finances are still catching up due to the sharp price increase that has persisted for almost two years.
Wages are now rising faster than prices, by around 8 percent, according to figures from the ONS, which economists expect will boost consumer spending and economic growth.
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