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UK retail sales growth hits 14-year high

News, 18 November 2016
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LONDON: The volume of retail sales in the UK jumped by 7.4% year-on-year in October, its highest rate of growth since April 2002, according to official figures.

Retail sales were also 1.9% higher last month compared with September and there were increases across all store types except department stores, the Office for National Statistics (ONS) reported on Thursday.

"This is the 34th consecutive period of 3 month on 3 month growth," the ONS said, adding that the amount spent online increased by 26.8% compared with October 2015 and by 1.3% compared with September 2016.

It seems that sales were boosted by strong growth in clothing and footwear as consumers stocked up for the winter, and spending on Halloween also helped.

"Cooler temperatures in October boosted clothing sales as shoppers took their cue to purchase winter clothing, while the supermarkets benefited from Halloween," said ONS statistician Kate Davies. "This has also coincided with the strongest growth in internet sales seen for five years," she added.

October's sales growth was far higher than most analysts had expected, the Financial Times reported, with forecasters expecting month-on-month growth of 0.4% in October and year-on-year growth of 5.3%.

The latest figures also provided further evidence that UK consumers appear to be shrugging off the Brexit vote in June, even though the decision to leave the European Union has since seen the value of the pound weaken considerably.

But Alan Clarke, an economist at Scotiabank, sounded a note of caution by observing that foreign tourists, encouraged by the weak pound, could have been the drivers of October's retail sales growth.

"The annual growth rate … is running at double the pace of household disposable income growth. That may be telling us that the spending is coming from abroad," he told the Guardian.

"It could also be consumers bringing forward spending to today, in anticipation of higher prices tomorrow," he added.

Data sourced from ONS, Financial Times, Guardian; additional content by Warc staff

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