Retail sales volumes in October fell by 0.7 percent on the month, 0.4 percentage points less than the consensus, and more than reversing the modest 0.1 percent rise seen in September (revised from 0.3 percent). Non-food stores were particularly affected, as budget uncertainties weighed on consumer spending. Despite the monthly dip, broader trends showed resilience, with sales volumes rising by 0.8 percent in the three months to October compared to the preceding three months. Year-over-year growth reached 2.4 percent, 0.8 percentage points below the consensus and prior revision for the previous month, marking a recovery from the disruptions caused by the pandemic, though volumes remained 1.5 percent below February 2020 levels.

While the monthly decline reflects immediate pressures, the annual and quarterly growth signals cautious optimism for the retail sector. These figures continue to highlight ongoing adjustments in consumer behaviour and economic dynamics post-pandemic. This latest update takes the RPI to minus 17 and the RPI-P to minus 24. This means that economic activity in general is quite well behind market expectations.

Forecasters look for retail sales down 0.3 percent on the month and up 3.2 percent on year. That would show significant slowing after September's 0.3 percent increase on the month and 3.9 percent rise on the year.

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.