UK retail sales have grown for the fourth month in a row as UK consumers splashed out on gold jewellery and electronics.
Higher discretionary spending will please the Treasury ahead of November’s budget, but they shouldn’t get too excited because the 0.5% retail sales growth rate was lower than the 0.6% in the month prior.
“UK retail sales rose 0.5% in September, marking a fourth straight monthly gain and signalling that consumers are holding up better than feared,” explained Lale Akoner, global market analyst at eToro.
“Despite cooler weather and mounting speculation of tax hikes in next month’s budget, spending momentum remains steady, a sign that the cost-of-living squeeze is easing, if gradually. The latest GfK survey supports this view, with confidence matching its yearly high and households showing greater willingness to buy big-ticket items. Still, shoppers remain value-driven, with savings sentiment elevated and promotions key to driving sales.”
In addition to GfK consumer sentiment data, the UK CPI reading released this week provides markets with a reason to be optimistic, along with relatively strong assessments of the UK economy from major banks in their earnings updates.
Some analysts even dared to suggest the UK economy could be on the verge of trending to the upside.
“With the GfK consumer confidence also improving (albeit still negative) and a healthy set of numbers from NatWest, this run of good UK data is beginning to look like a trend,” said Chris Beauchamp, Chief Market Analyst at IG.
“Whether retail sales will hold up well in months to come now that reports of income tax rises are being contemplated is another matter entirely. It would be entirely unsurprising if the government managed to spoil this nascent recovery.”