INSTANT VIEW - Retail sales fall in September

LONDON (Reuters) - Retail sales fell less than expected in September, but the annual rate fell to its weakest in 2-1/2 years, the Office for National Statistics said on Thursday.

ANALYST COMMENTS

HOWARD ARCHER, GLOBAL INSIGHT

"The correction in retail sales in September was less than expected following August's sharp gains and the suspicion remains that the official figures are overstating the strength of sales. Certainly, survey evidence from the CBI and British Retail Consortium, as well as the overall bearish reports from individual retailers, point to greater weakness.

"Nevertheless, the underlying trend in retail sales was soft as they were up just 0.1 percent quarter-on-quarter in the third quarter. Furthermore, year-on-year retail sales growth of 1.8% was the lowest since February 2006. Sales of household goods were particularly weak as they were hit by the sharp downturn in the housing market.

"With retail sales only edging up by 0.1 percent quarter-on-quarter in the third quarter, and with the Bank of England's Regional Agents reporting that their score for spending on consumer services became "significantly negative" in September, it could well be that consumer spending fell in the third quarter, thereby contributing to overall contraction in the economy."

BRIAN HILLIARD, SOCIETE GENERALE

"The fall is pretty much in line with expectations from the surveys, but the basic picture is a significant deceleration in the months ahead.

"What was particularly striking was the fall in household goods sales, which fits in well with the weakness of the housing market.