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Summary
- The British Retail Consortium maintained shop price index has shown a 1.2 per cent fall in prices in October
- Confederation of British Industry (CBI) data has shown falling sales with a flat volume in groceries
- The drop in October retail sales could be a warning sign of a further loss of momentum in the economy
The business environment is going through a rough phase with October witnessing a mixed bag of commerce activities. Prices in British shops continued to slide this month due to fierce competition among retailers than in September, which means that the discounts on non-food items were the smallest since the start of the coronavirus pandemic. Also, the retail sale figures in the UK have fallen at the sharpest pace since June, according to the Confederation of British Industry’s (CBI) latest data.
According to the latest British Retail Consortium data, shop prices fell by 1.2 per cent in October and prices for non-food items declined by 2.7 per cent, whereas the numbers in September were 1.6 per cent and 3.2 per cent, respectively.
The retail sales in the first eight months to October dropped significantly specifying a loss in growth momentum until September. The retail sales registered a rise at the fastest pace for 18 months in September.
On the other hand, as per monthly Distributive Trades Survey by the Confederation of British Industry (CBI), the conditions across the retail sector were mixed. A flat volume in groceries has been witnessed after a straight growth for the last five months before October. The survey was conducted with 54 retailers.
The departmental stores, clothing and other non-food items reported a drop in the respective sales. On the other hand, retailers of furniture, DIY and recreational goods recorded a strong growth along with a similar uptick in the online sales volumes.
Prices at glance
Amid the various categories, the prices of food items rose by 1.2 per cent in both September and October, whereas the fall in prices of non-food items eased from September’s rate of 3.2 per cent to 2.7 per cent in October. Interestingly, the non-food items saw a high demand in October surpassing the pre-pandemic levels as compared to the previous month.
The profit margins of the retailers may continue from here, said Helen Dickinson, chief executive, BRC. A likelihood of discounts in the non-food items is expected soon with the re-imposition of restrictions, an expected rise in the unemployment after October due to the coronavirus pandemic, she added.
Falling retail sales
While the orders placed with the suppliers have decreased at the fastest pace since June, there is a possibility of decline in retail sales volumes in November. The retail sales slipped sharply by 23 per cent in the eight months to October as against a growth of 11 per cent in the previous month.
According to CBI, the retail sales are likely to follow a subdued regime with the figures falling at a similar pace in November projected at -26 per cent. The orders placed to the suppliers reduced steeply by 39 per cent in October. The figures are expected to be 48 per cent in November.
The online sales have been broadly in line with the long run average picking up a growth of 47 per cent in October vs 35 per cent in September with a likelihood of similar growth rate in November. Notably, the stock levels according to the expected sales were “broadly adequate”, after easing to their lowest level since March.
The stock levels registered a growth of 6 per cent in October as against a 11 per cent rise in September. The November figure is expected to be around 8 per cent.
Wholesalers and motor traders
Besides some retailers, the wholesalers and motor traders have registered a dull sales volume in October. However, the wholesalers saw a lower dip of 20 per cent in October as against 41 per cent in September.
The motor traders have reported a sliding volume with the sales by 32 per cent in October after three months of continuous growth. The CBI is further expecting a decline of 18 per cent and 16 per cent in the sales volume of wholesalers and motor traders, respectively in November.
Also Read: UK retail sales soar for fifth straight month, exceed expectations
Also Read: PMI indicates a flattening recovery for the UK economy
Expert’s take
CBI's Principal Economist Ben Jones has said that the economy can see a further loss of momentum in the economy as coronavirus cases pick up.
The apparent growth track can further witness a couple of hurdles in the next few months with unemployment numbers going up. The BRC has separately raised concerns on the retail prices and, also, cautioned that the post-Brexit period would be difficult if the UK government fails to reach a zero-tariff trade agreement with the European Union before 31 December.
