Today’s release from the Office for National Statistics (ONS) showed that Retail Sales volumes grew by 1.9% in September, the biggest monthly gain since December 2013.
While the ONS data is seasonally adjusted, it is worth noting that the collection period for September was between the 30th of August and the 3rd of October, which includes the bank holiday on August the 31st. The back-to-school shopping done on this day will have provided a significant boost to the unadjusted September figure.
The 3-month comparison provides a more reliable indication of the underlying pattern of retail spending, and shows growth in sales volumes of 0.9% in the 3-months to September. This represents a marginal uptick compared to the previous six months, though a significant slowdown from the growth rates reported in January (2.5%) and February (2.2%).
Growth in the 3-month comparison was supported by healthy growth in volumes in September in the predominantly food stores sector (2.3%), department stores (1.7%) and household goods stores (4.7%). Clothing and footwear stores was the only sector to report a monthly decline in volumes.
Looking ahead, it is clear that the underlying growth in retail sales continues at a solid pace. For 2015 overall we continue to expect retail sales growth to be close to 4.5%, underpinned by strong consumer fundamentals. Expansion will remain healthy in 2016, though not matching this year’s exceptional pace as the boost to household incomes moderates in line with a gradual uptick in inflation and employment growth settles back to a more sustainable pace.