UK retail sales surged in September

Oscar Williams-Grut
·Senior City Correspondent, Yahoo Finance UK
·2 min read
CARDIFF, WALES - OCTOBER 20: A woman wearing a face mask walks past a Topshop store on October 20, 2020 in Cardiff, Wales. Wales will go into a national lockdown from Friday until November 9. People will be told to stay at home and pubs, restaurants, hotels and non-essential shops must shut. Primary schools will reopen after the half-term break, but only Years 7 and 8 in secondary schools can return at that time under new "firebreak" rules. Gatherings indoors and outdoors with people not in your household will also be banned. (Photo by Matthew Horwood/Getty Images)
A woman wearing a face mask walks past a Topshop store in Cardiff, Wales. Photo: Matthew Horwood/Getty Images

Retail sales continued to rebound in Britain last month, smashing forecasts for growth.

The Office for National Statistics said on Friday that retail sales grew by 4.7% in September. Month-to-month sales grew by 1.5%.

Economists had expected annual sales growth of 3.7%, or 0.4% on a monthly basis.

Sales were driven by DIY and garden items, as well as a revival in supermarket food sales as the Eat Out to Help Out scheme came to an end.

The data confirmed the fifth consecutive month of growth for retail sales and marks an acceleration in growth. Sales grew by 2.3% in August, undershooting economists’ forecasts.

“Retail sales continued to benefit in September from households spending more of the ‘enforced savings’ that they accumulated during the second quarter,” said Samuel Tombs, chief UK economist at Pantheon Macroeconomics.

Retail sales are now 5.5% above February’s pre-pandemic levels, the ONS said. The three months to September saw the biggest quarterly increase in sales on record. Fuel is the only sub-sector where sales remain below pre-pandemic levels.

Watch: UK retail beats expectations on strong DIY

READ MORE: UK businesses in Tier 2 lockdowns get extra government support

The momentum came despite mounting restrictions in the UK to tackle the COVID-19 second wave. The government last month introduced harsher local lockdowns across the north of England to quell outbreaks and limited gatherings across the UK to no more than six people.

Experts said sales momentum could slow in the months ahead as the COVID-19 second wave and the end of furlough hits confidence.

“Retailers are braced for a difficult and unconventional end to the year,” said Lynda Petherick, head of retail at Accenture UK and Ireland.

“The months ahead will be different from previous years – retailers are already encouraging people to shop online and to shop earlier than usual ahead of Christmas.”

Bank of America said earlier this week that consumer confidence in the UK was weakening. A long-running private survey conducted by the bank found consumer confidence had hit an all-time low.

“Whatever the cause - rules or voluntary distancing - our proprietary UK consumer survey shows consumers pulling back,” economist Robert Wood wrote in an investment note.

Tombs said September was likely to be the peak for retail sales this year.

WATCH: What is inflation and why is it important?