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Title: U.K. Retail Sales Fell Again in September Amid Runaway Inflation

Oct 21, 2022 02:21AM ET


Retail sales in the UK fell for the second consecutive month in September as consumers rebelled against runaway inflation, bringing the country closer to recession.

Sales fell by 1.4% in real, i.e., inflation-adjusted, terms as inflation exceeded 10%. The August decline was also revised down to 1.7% from the initial reading of 1.6%.

This brought sales down 6.9% on the year.

Core retail sales, which exclude fuel and vehicle sales, were also down 1.5% on the month and 6.2% from a year earlier.

The figures were also affected by the death of Queen Elizabeth II, which caused many stores to close for a week of national mourning.

There was also bad news on Friday regarding government finances. Public sector net borrowing rose to £19.25 billion ($21.5 billion), well above forecasts of £12.3 billion. This is the second highest figure for a September since records began in 1993.

The increase in borrowing requirements was due to higher interest payments on index-linked government debt and higher welfare benefit payments, most of which came from payments to people struggling to pay their energy bills. So-called Enhanced Winter Fuel Payments, which are paid during November and December, are recorded every September.

In a note to clients, Tombs estimated that the new Chancellor of the Exchequer, Jeremy Hunt, will still have to find £38 billion of savings to ensure that debt as a proportion of GDP is reduced over three years, as the government aims to do. He expected the government to resort to cuts in public spending-at least in real terms-to help find those savings.

"In short, austerity is about to return, amplifying the incipient recession," Tombs said.

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