Weakening consumer confidence was laid bare today after new figures revealed a much worse than expected October for retailers.
The worst month for the High Street since April intensified fears over more pain for the UK economy today, raising speculation of a return to the printing presses by the Bank of England.
The shock 0.8% slide in sales volumes for struggling retailers during October was far worse than feared in the City and put a “serious dent” into growth hopes for the fourth quarter, according to City economists.
Despite a 1% growth surge between July and September, today’s downbeat figures add to mounting evidence of a tough October for the British economy.
IHS Global Insight’s Howard Archer said the figures were “disappointing and worrying” with inflation also rising to 2.7%.
Capital Economics economist Samuel Tombs said: “The renewed pick-up in inflation together with growing signs that the resilience of employment is starting to fade mean that the backdrop for spending is not looking good ahead of Christmas.”
The worst-affected sectors were food and clothing, with grocers suffering their worst month for a year. Clothing and footwear retailers endured a 2.3% sales slump, the worst since an Easter-impacted April.
ING economist James Knightley said more quantitative easing was likely: “With Federal Reserve officials talking about stepping up QE3 in the US and the Bank of Japan set to do likewise next year, we continue to believe the Bank of England will have to follow suit. Governor King talked yesterday of the need for stronger external demand to help rebalance the UK economy. This implies further QE is probable in an effort to keep a lid on sterling and maintain competitiveness.”
