Customers wait outside a store on Oxford Street in London. Bloomberg News
UK retail sales fell for a second month in October as rising unemployment and the financial crisis dissuaded shoppers from spending.
Sales fell 0.1 percent on the month after dropping 0.5 percent in September, the Office for National Statistics said yesterday in London. The decline was less than the 0.9 percent median forecast in a Bloomberg News survey of 27 economists. On the year, sales increased 1.9 percent.
Marks & Spencer Group Plc, the UK's biggest clothing retailer, offered discounts on all apparel and some alcohol yesterday after saying this month that the business climate was the toughest since the early 1990s. Bank of England Governor Mervyn King says that Britain is probably already in a recession. "The retail environment looks an awful lot worse than these figures suggest given the sales that have been announced at places such as Marks & Spencer," said Jeavon Lolay, an economist at Lloyds TSB Group Plc in London. "Consumer spending will get worse. The Bank of England is still going to be cutting interest rates and we see a 1 percentage point reduction next month."
Bank of England policymakers voted unanimously to cut the benchmark interest rate by 1.5 percentage points to 3 percent this month, and considered an even bigger reduction as their forecasts showed a deepening recession, minutes of the Nov 6 decision showed on Wednesday. Household goods stores led the monthly drop and fell 5.4 percent from a year earlier, the most since 1992, as shoppers bought fewer electrical items, the statistics office said. Food sales rose 1 percent, helping to offset the overall decline.
Department stores and retailers of textiles, clothing and footwear also reported declines on the month. Total non-food sales increased 0.9 percent from a year earlier, the least in three years, the statistics office said.
Marks & Spencer held a "one-day Christmas spectacular" yesterday with discounts of 20 percent, according to a flyer distributed late on Wednesday outside its Finsbury Pavement store in central London. "We know our customers are having a tough time," Marks & Spencer Chairman Stuart Rose said on Wednesday. "We want to show our customers we are with them."
Consumers are paring back spending as the slump in the housing market deepens. The asking price of a home dropped 7.1 percent from a year earlier this month, Rightmove Plc said on Nov 17.
