Having staged a modest recovery in August, UK retail sales volumes fell in September, the Office for National Statistics (ONS) has said.
Sales volumes were down by 0.9 per cent in September, following a rise of 0.4 per cent in August.
Economists had predicted a fall of 0.2 per cent, following 14 consecutive rises in interest rates.
Richard Hunter, head of markets at Interactive Investor. said the numbers showed the UK consumer "may finally be retrenching, given both cost-of-living pressures and what has been a fairly relentless interest rate-hiking policy from the Bank of England".
Shops highlighted the continuing cost-of-living crisis and the unseasonably warm September weather, which stalled the start of autumn clothing sales, as reasons for the slump.
In non-store retailing, which is mostly online, sales volumes fell by 2.2 per cent in September, following a dip of fall of 0.9 per cent the previous month.
Gizem Gunday, partner at McKinsey and company, said: “There are also signs that cautious customers are cutting back spending on discretionary items, with non-food categories particularly hard hit and big-ticket items like furniture and jewellery all down.
"September’s Indian summer has also impacted sales of new-season clothing.
“Online sales were also not helped by the warm weather and the continued cautious nature of consumers towards non-food spending," she added.
'Steeper consumer pullback'
With retailers now entering what is often called the "golden quarter", the run that includes Black Friday, Christmas and January sales, there are some fears that the cost-of-living crisis will hold down consumer spending over this crucial period.
"While no one was expecting the month to be a bright spot for the high street, the full picture suggests a harsher-than-expected reining in of discretionary spending," said Sophie Lund-Yates, lead equity analyst at Hargreaves Lansdown, who also pointed out the "growing anxiety and the potential that we’re looking at a steeper consumer pullback than forecast as we head into the Christmas trading season”.
On the other hand, there is some hope that the recent falls in inflation will loosen purse strings and open wallets in time to boost festive-season spending.
“With the golden quarter fast approaching, retailers are hopeful that easing inflation we have seen in recent months will boost consumer confidence," said Helen Dickinson, chief executive of the British Retail Consortium.
"Retailers will continue to support customers by bringing prices down wherever they can. But the support they can provide will be limited by the expected £470 million-a-year [$569 million] rise to business rates from next April.
"The Chancellor must scrap the rates rise in his upcoming budget so retailers can continue to deliver the best value for customers over the festive period and beyond.”
Meanwhile, consumer confidence in the UK fell at its sharpest rate since the start of the Covid-19 pandemic, according to GfK.
The research company's well-respected monthly gauge of consumer sentiment declined nine points to minus 30 in October.
The fall was the largest since April 2020, when the first pandemic lockdown took place, and is fairly similar to the drop registered shortly after the Brexit vote in 2016.