2018.11.1506:00:00UTC+00UK Retail Sales Unexpectedly Fall In October

UK retail sales declined for a second straight month in October, defying expectations for an increase, amid a sharp decrease in sales of household goods, preliminary data from the Office for National Statistics showed on Thursday.

Sales volume including automotive fuel dropped 0.5 percent from September, when they fell 0.4 percent, revised from a 0.8 percent slump. Economists had forecast a 0.2 percent increase.

On a year-on-year basis, retail sales volume grew 2.2 percent in October, which was the slowest pace in six months. Economists were looking for a 2.8 percent gain.

September's sales growth was revised up to 3.3 percent from 3 percent.

Excluding automotive fuel, retail sales volume fell 0.4 percent month-on-month, in contrast to expectations for a 0.2 percent increase. September's sales decline was revised to 0.3 percent from 0.8 percent.

Year-on-year retail sales volume growth excluding auto fuel slowed to a six-month low of 2.7 percent from 3.6 percent in the previous month, which was revised from 3.2 percent.

Household goods stores logged a 3 percent monthly decline in October following strong gain August and September.

Clothing sales registered a monthly fall of 1 percent, mainly due to the mild October weather that made consumers reluctant to purchase winter ranges.

Food store sales rose 0.4 percent monthly following declines in the previous two months.

The share of online sales in total of all retailing increased to 18 percent from 17.7 percent reported in September 2018. Textile, clothing and footwear stores continued a record proportion of online sales at 18.2 percent, despite a fall in total retail spending in this sector.

"A continued acceleration in real earnings, assuming a Brexit deal is signed, which admittedly, is looking less likely by the minute, should give household spending a boost next year," Capital Economics economist Thomas Pugh said.

Earlier on Thursday, European Council President Donald Tusk announced that the EU will finalize and formalize a Brexit deal on November 25.

Following the announcement, the UK Brexit Secretary Dominic Raab resigned from his post, saying he cannot in good conscience support the terms proposed in the Brexit deal.

Figures from ONS this week showed that the UK net pay growth in the three months to September was the fastest since the October to December period of 2008, while inflation held steady at 2.4 percent in October.