Retail sales fell for the second time in three months in September. A 0.9 percent monthly slide was much steeper than the market consensus and easily more than enough to reverse August's unrevised 0.4 percent gain. Positive base effects ensured that annual growth still rose from minus 1.3 percent to minus 1.0 percent but volumes stood at their lowest level since last December.

Excluding auto fuel, the picture was much the same with purchases down 1.0 percent versus August and 1.2 percent on the year.

September's monthly setback was largely attributable to the non-food sector where sales declined 1.9 percent, their worst performance so far in 2023. Within this, all of the main subsectors posted losses, notably household goods (minus 2.3 percent) and other stores (minus 2.0 percent). Elsewhere, food edged up a further 0.2 percent and auto fuel increased 0.8 percent but non-store retailing was off 2.2 percent.

The latest data mean that overall volumes fell 0.8 percent over the quarter. This means that the sector subtracted from third quarter GDP growth which is now all the more likely to carry a negative handle. Inflation is key to the BoE's November interest rate decision but the surprising weakness of today's report will help to boost the case for those arguing for no change in Bank Rate. To this end, the UK RPI now stands at minus 9 and the RPI-P at minus 29 so it is not just retail that is undershooting market expectations.

Sales are expected to slip 0.1 percent on the month after a 0.4 percent rise in August.

Retail sales measure the total receipts at stores that sell durable and nondurable goods. The data include all internet business whose primary function is retailing and also cover internet sales by other British retailers, such as online sales by supermarkets, department stores and catalogue companies. Headline UK retail sales are reported in volume, not cash, terms but are available in both forms. The data are derived from a monthly survey of 5,000 businesses in Great Britain. The sample represents the whole retail sector and includes the 900 largest retailers and a representative panel of smaller businesses, including internet sales. Collectively, all of these businesses cover approximately 90 percent of the retail industry in terms of turnover.

With consumer spending a large part of the economy, market players continually monitor spending patterns. The monthly retail sales report contains sales data in both pounds sterling and volume. UK retail sales data exclude auto sales.

The pattern in consumer spending is often the foremost influence on stock and bond markets. For stocks, strong economic growth translates to healthy corporate profits and higher stock prices. For bonds, the focus is whether economic growth goes overboard and leads to inflation. Ideally, the economy walks that fine line between strong growth and excessive (inflationary) growth.

Retail sales not only give you a sense of the big picture, but also the trends among different types of retailers. Perhaps apparel sales are showing exceptional weakness but electronics sales are soaring. These trends from the retail sales data can help you spot specific investment opportunities, without having to wait for a company's quarterly or annual report.