Temps Drop, Brits Shop

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What's going on?

Thanks to a resilient consumer and a dose of cold weather sales of retail goods in the UK rose at their fastest pace in 14 years in October!

What does this mean?

People bought 7.1% more stuff compared to a year ago much higher than economists were expecting. Clothing sales provided a big boost as temperatures dipped and people, presumably, rushed out to buy warmer clothes. However, the figure is a bit misleading because it counts the volume, not the value, of goods sold.


Stronger sales were undoubtedly helped by lower prices (average store prices fell by 0.7% due perhaps to things like stiff competition). While thats good for the shopper, its not so good for the stores. Nevertheless, even accounting for the drop in prices, its another sign that the UK economy is holding up quite well in the aftermath of the Brexit vote (at least, so far).

Why should I care?

The bigger picture: It was a huge month for internet sales.
Internet sales grew at their fastest rate in five years. Department stores were the only type of retailer that saw sales decline. Shoppers, especially of clothing and household goods, are still increasingly moving online (which helps explain why M&S is cutting back its clothing and home business).


For you personally: Brits are keeping calm and shopping on. But will it last?
So far, despite the uncertainties created by the Brexit vote, spending by British consumers has held up well. The question is how long this can last: most economists expect prices in the overall economy to rise significantly next year. Unfortunately, wages are not expected to rise in tandem, partly because businesses appear unlikely to hire as many workers as they otherwise would while the cloud of Brexit uncertainty prevails. If prices rise and wages drop, the shopping spree may be over for Brits.

Originally posted as part of the Finimize daily email.

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