UK retail sales slide in September as warm weather hurts clothing demand

LONDON, Oct 20 (Reuters) - British retail sales fell more than expected in September as shoppers delayed buying autumn clothing due to unseasonably warm weather, against the backdrop of broader cost of living pressures, official figures showed on Friday.

Retail sales dropped by 0.9% on the month after a 0.4% rise in August, the Office for National Statistics (ONS) said, a bigger decline than the 0.2% fall economists had forecast in a Reuters poll.

“It was a poor month for clothing stores as the warm autumnal conditions reduced sales of colder weather gear. However, Septembers unseasonable warmth did help drive up food sales a little,\” ONS Chief Economist Grant Fitzner said.

Clothing sales volumes fell 1.6%, and household goods stores saw a 2.3% drop in sales, which the ONS attributed to ongoing cost of living pressures.

Sterling weakened against the U.S. dollar after the data.

Compared with a year ago, sales volumes were down 1.0%, while sales in the third quarter overall - which had a weak start due to unusually wet weather in July - were 0.8% lower than in the quarter before.

British households have faced a cost-of-living squeeze over the past two years due to supply-chain difficulties and labour shortages after the COVID-19 pandemic, amplified by a surge in energy costs after Russia invaded Ukraine.

While retail sales volumes surged in mid 2021 when shops fully reopened in Britain after COVID-19 restrictions, purchases have steadily fallen since and for the past year sales volumes have been below pre-pandemic levels.

Fridays data showed that while retail spending last month in cash terms was 17% above 2019 levels, the volume of goods bought was more than 3% lower than in 2019.

Retail sales in the third quarter were likely to subtract 0.04 percentage points from the growth rate of gross domestic product over the period, the ONS said.