LONDON, Sept. 24 (Xinhua) -- Britain's retail sales deteriorated further in September as weak consumer confidence and mounting cost pressures weighed on the sector's outlook.
The country's retail sales volumes fell at a steeper rate, and online retail sales declined at the fastest pace in nearly three years, according to a report released by the Confederation of British Industry (CBI) on Thursday.
The report also underlined that retailers cut back on order volumes at the quickest rate on survey record since 1983.
Some retailers attributed the deterioration to poor consumer sentiment, while persistent sales downturn prompted them to cut orders at a record fast pace, said Martin Sartorius, lead economist at the CBI.
"This weakness was echoed across the distribution sector, with wholesalers and motor traders also seeing faster falls in sales," he said.
Retailers expect the weakness to continue in October, with annual sales volumes forecast to decline sharply and online sales and orders expected to keep falling rapidly, according to the CBI.
Weak retail activity has coincided with deteriorating consumer confidence. A survey released by the British Retail Consortium (BRC) shows worsening expectations for both the wider economy and household finances.
According to the survey, consumer expectations for the state of the economy over the next quarter fell to minus 34 in September from minus 28 in August, while expectations for personal finances dropped to minus 15 from minus nine. Expectations for retail spending and personal saving also fell in September.
Helen Dickinson, chief executive at the BRC, said the decline in consumer confidence was particularly sharp among women, as households braced for higher energy costs this winter and bills rising faster than shop prices.
"It is little surprise that expectations of retail spending fell, even as overall spending plateaued," she said.
According to the Resolution Foundation, household energy bills are 26 percent higher in real terms than five years ago, and the price cap is set to rise in October and again in January 2027, possibly by a significant amount.
Inflation is adding to the pressure on households and businesses. Britain's consumer price index (CPI) rose 3.1 percent year on year in August and the Bank of England forecasts inflation at around 3.75 percent in the final quarter of 2026 and above 4 percent in the first quarter of 2027.
Food prices could add further pressure. In its latest forecast for food inflation, the Institute of Grocery Distribution (IGD) put average inflation at 2.9 percent to 3.9 percent for 2026 and expects it to rise to around 6 percent in 2027.
Retailers are also facing pressure to contain prices. "Tackling the cost of living is a top priority and retailers continue to do all they can to hold prices down. But until fiscal conditions improve, they will be fighting with one hand tied behind their back," said Harvir Dhillon, lead economist at the BRC.
Consumers, meanwhile, had already made adjustments to cope with higher prices. James Walton, chief economist at the IGD, said "shoppers have already adapted to repeated periods of high food price inflation. Many have changed how and where they shop, switched products or reduced discretionary spend, leaving fewer options available to absorb any further price rises."
