LONDON (Reuters) - British shops suffered their worst October for sales in a decade, a survey showed on Friday, adding to signs of weakening consumer spending even before interest rates were raised last week.
UK consumers’ spending power is being squeezed as inflation rises and wage growth falters. Last week, the Bank of England raised borrowing costs for the first time in a decade.
Accountancy and business advisory firm BDO said its monthly High Street Sales Tracker (HSST) found like-for-like sales fell 5.2 percent in October year-on-year — the largest drop ever recorded by the survey.
It said fashion sales slumped 7.9 percent, hurt by an unusually warm month, while homewares were down 0.5 percent.
“As wage increases continue to be outstripped by higher inflation, and with the (now real) anticipation of higher mortgage payments, then it comes as little surprise that people are tightening their belts prior to the anticipated Christmas expenditure,” said BDO.
The BDO data chimes with other recent surveys from the British Retail Consortium and the Confederation of British Industry.
Department store chain John Lewis posted six straight weeks of sales declines, while clothing retailer Next (NXT.L) missed analysts’ quarterly forecasts.
Reporting by James Davey; editing by John Stonestreet