Oct 21, 2022 02:21AM ET
By:AnalysisWatch
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.