- Rob Wood, an economist at Berenberg Bank
Britain's retail sales, which account for 5.6% of total UK GDP, rose at the fastest clip in six month in October, driven by sales of household goods and spending on food. Total retail sales including auto fuel soared 0.8% from September, when they dropped 0.4%, which was the weakest performance since January, according to the Office for National Statistics. On an annual basis, total sales surged 4.3% in October compared with the same month a year ago. The jump in the quantity bought by consumers was driven by a large decline in prices, the ONS reported. Average store prices fell 1.5% in October from the previous year, led by petrol stations, following the sharp oil price decline this year. Household goods retailers and department stores were some of the largest contributors to the rise in volumes. Also, clothing stores returned to growth in October, after warmer-than-expected weather in September made consumers put off their purchase of winter clothes.
Consumer spending has driven Britain's strong economic recovery which began in mid-2013 and is likely to remain its main engine as demand for exports remains subdued due to the slowdown in the continental Europe. A sustained pickup in wages would allow consumers to keep supporting the economy without increasing the amount of debt taken up by Britons. The Bank of England underscored that consumption has been supported by a drop in savings.
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