Retail sales hit by drop at food stores

UK retail sales volumes fell in October after a drop in trading at food stores, according to official figures.

The Office for National Statistics (ONS) said sales volumes fell 0.6%, which followed a 1.7% rise in September when sales were helped by the Rugby World Cup.

The monthly fall in food store sales was the biggest drop since May 2014.

Retail sales volumes rose 3.8% compared with a year ago, compared with a 6.2% annual rise in September.

Average shop prices, including petrol stations, were 3.3% lower in October than a year earlier.

The ONS said department stores and clothing also dragged on retail sales growth last month.

However, sales volumes in the three months to October compared with the previous three-month period - seen as a better indicator of the underlying trend - rose 0.9%.

Chris Williamson, chief economist at Markit, said October's drop in sales "looks to be a one-off and masks a reassuringly solid underlying trend".

Howard Archer, economist at IHS Global Insight, said shopping in the run-up to Christmas was "of vital importance to retailers", and that the extent of Black Friday discounting would be "interesting".

"Will UK retailers match or even surpass the substantial discounting that took place on Black Friday at the end of November last year? Or will retailers decide that less aggressive is needed this year due to consumers' improved purchasing power and relatively high confidence?" he said.

Online sales

The ONS said that online sales in October increased by 11.2% compared with the same period in the previous year.

Earlier this week, online retail sales association IMRG said sales had increased by 8.9% compared with last year, which was the lowest growth for fifteen years.

It said the prospect of Black Friday discounts probably caused consumers to hold off on spending in the hope of a bargain.