Retail sales in the UK dropped unexpectedly for the second month in a row during September, as government budget cuts led to reduced spending on everything from gasoline to clothing.
Sales declines 0.2% from last month, when they fell 0.7%, according to the Office for National Statistics. Economists surveyed by Bloomberg News expected a 0.3% rise.
George Osborne, the Chancellor of Exchequer, said on Thursday that the Bank of England could make use of monetary policy to help the economy, as the biggest budget squeeze since the Second World War resulted in a job loss of 0.5 million.
“If the month on month number marks a new downtrend trend, it may foretell a pessimistic picture for the fourth quarter,” said David Tinsley, a senior economist working at National Australia Bank in London. “There’s a lot of pressure on the consumer from high inflation, tax rises, and the forecast fall in public sector jobs".
The fall in sales was driven by gasoline, online mail-order businesses and clothing, according to the statistics office. Spending on gasoline didn't rise as much as retailers had anticipated this year despite the rise in oil prices.
Inflation held at 3.1% during September, exceeding the UK government's 3% target for a seven month.
Recent
figures show that the speed of economic growth has slowed down during
the third quarter. UK unemployment claims rose in September for a second
month and, according to Nationwide Building Society, consumer confidence reached its lowest level in 18 months.
