UK retail sales fall in September as shoppers buy less food

(Reuters) - British retail sales fell by the most in six months in September after a large drop in food purchases, which followed an unusually warm summer that had encouraged Britons to splash out on barbecues.

Retail sales volumes in September dropped by 0.8 percent from August - a bigger fall than economists had expected in a Reuters poll - after the largest decline in food purchases since October 2015, the Office for National Statistics said.

Annual sales volume growth slowed to 3.0 percent from 3.4 percent, in contrast to the pick-up expected by economists, though looking at the quarter as a whole, annual growth was the strongest for a calendar quarter since the end of 2016.

 

Britain's economy has slowed since June 2016's Brexit vote but consumer spending has remained fairly solid, despite pressure on households' disposable income from a spike in inflation since the referendum.

Less than six months before Britain is due to leave the European Union, there have been signs this week of respite for households, with underlying pay growth picking up to its fastest since 2009 at 3.1 percent and inflation dropping to 2.4 percent.

But September data from the British Retail Consortium and Barclaycard had already shown households were spending more cautiously after their summer spree, which was also boosted by the World Cup in June and July.

"Retail sales continued to grow in the three months to September ... despite a slowdown in food sales following a bumper summer," ONS statistician Rhian Murphy said.

Thursday's data showed a 1.5 percent monthly drop in food sales, spread across both big supermarkets and smaller stores. Sales of household goods such as furniture and electricals saw the biggest annual growth since 2001, boosted by promotions, clearance and online sales.

British retailers themselves have reported mixed fortunes in their most recent earnings reports.

While grocery sales have been robust this year, a shift away from high-street spending towards holidays and entertainment, along with intense online competition, has taken its toll on clothing and homeware retailers who lack a dominant internet presence.

This week fashion retailer Superdry warned on profit, while department store group John Lewis has reported lacklustre autumn trading.

Online fashion has been the exception with both ASOS and Boohoo both reporting strong trading.

(Reporting by David Milliken and Andy Bruce)