Mild weather in Britain blamed for surprise shrink in retail sales
BRITISH retail sales unexpectedly fell in October, hit in part by mild weather that caused shoppers to put off buying winter clothes, official data showed yesterday.
Retail sales volumes shrank 0.7pc on the month to show 1.8pc growth on the year, the Office for National Statistics said.
Economists had expected sales to be flat on the month and to be 3.1pc higher on the year.
Sterling fell after the data was released while gilts prices briefly rose as investors factored the surprising weakness into their largely upbeat expectations for Britain's recovering economy.
The Bank of England raised its growth forecasts on Wednesday for the British economy but stressed it was in no rush to raise interest rates.
Philip Rush, an economist with Nomura, said some of the weakness in October's retail sales could be a response to a bounceback in September, but it was also a reminder of the headwinds still facing the British economy.
"I think that there's too much optimism around UK demand prospects at the moment and there needs to be a reassessment of relative UK growth prospects," he said.
Consumer spending has grown for much of 2013 despite inflation far outstripping wage growth.
Data earlier this week showed inflation fell to 2.2pc in October but earnings were up just 0.7pc in the three months to September.
Helping to boost spending has been a combination of rising house prices, record low mortgage rates and higher jobs growth.
The chief executive of one of Britain's supermarket chains Sainsbury's cautioned on Wednesday that any recovery in Britain's economy may need time to take effect, given the strain on household budgets from below-inflation wage rises. (Reuters)