Retail sales fell in October as cautious consumers delayed their purchases ahead of the Chancellor’s Budget and the start of the Black Friday discount period. Sales volumes fell 1.1%, the first decline in three months and significantly worse than economists expected.
The Office for National Statistics (ONS) said the fall was partly due to shoppers deliberately holding back spending until this month’s big sales. ONS chief economist Grant Fitzner said many consumers had reported waiting for Black Friday deals starting next week. October also marks the opening of the important retail “Golden Quarter” in the run-up to Christmas.
The decline wipes out the 0.7% rise in retail volumes recorded in September – a figure revised upward from 0.5%. Although sales rose 1.1% on a rolling three-month basis and were 0.4% higher than a year ago, spending fell in almost all major categories last month. Department stores were the hardest hit, with sales down 4.5%, while clothing and footwear fell 1.5%. Home goods fell 0.4% and online sales fell 0.4%. An exception was technology sales, which were boosted by the launch of Apple’s latest iPhone.
Economists warned that shoppers’ caution reflected growing concerns about the upcoming Budget amid speculation about higher taxes and their impact on disposable incomes. Rob Wood, chief UK economist at Pantheon Macroeconomics, said the “increasingly chaotic budget preparation” had dented confidence. He argued that speculation over income tax hikes was likely to weigh on budgets throughout October and that political turmoil was likely to further depress sentiment in November.
Capital Economics’ Ruth Gregory said retailers may not enjoy the strong final quarter they were hoping for. “Higher taxes in the budget could slow retail spending during the crucial holidays and into next year,” she said.
Despite the weaker October numbers, some analysts believe retailers still have opportunities to capitalize on demand. Sagar Shah, associate partner at McKinsey & Company, said brands are preparing more personalized and creative Black Friday campaigns to address consumer reluctance. He noted a shift toward immersive experiences, anti-advertising formats and shoppable content aimed at countering “ad fatigue” and driving engagement.
Retail sales remain a key leading indicator of overall economic momentum, and October’s numbers provide fresh evidence that consumers are bracing for a tightening of tax policy ahead of what is expected to be a tax-heavy budget.
