Retail sales volumes rose 0.3 percent month-over-month in September, well above market forecasts and following an unrevised and more robust 1.0 percent increase in August. This was their third straight advance. Annual sales growth was 3.9 percent, the strongest since February 2022, and after an upgrade to 2.3 percent in August.

Computers and telecommunications sales significantly boosted sales growth although supermarket sales experienced a slight decline. Excluding auto fuel, volumes were also up a monthly 0.3 percent.

The quarterly figures show a solid 1.9 percent increase (ex-auto fuel 2.0 percent), the largest since July 2021 and reflected broad-based gains. Even so, sales were still marginally (0.2 percent) below pre-pandemic levels of February 2020.

In sum, the data show retail sales gaining some momentum, with the technology sector being the primary driver. The upturn, at least in part, is probably attributable to the improvement in consumer confidence although this could prove short-lived ahead of what is widely expected to be a tight budget later this month.Today's update lifts the RPI to minus 5, showing overall economic activity behaving much as forecast, and the RPI-P to 23. The gap between the two measures underlines the surprising weakness of prices.

Expectations center on a decline of 0.4 percent on the month and an increase of 3.1 percent from a year ago.

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.