Retail sales growth slowed in September despite boost from technology spending

Sales growth in shops in Great Britain slowed last month as an increase in purchases of technology was tempered by the largest monthly fall in spending at supermarkets this year.

- Mark Sweney, Larry Elliott

The last official snapshot of consumer activity before the budget showed a modest 0.3% increase in spending in shops and online - down on August's 1% increase but better than financial markets had expected.

Despite warnings from the chancellor, Rachel Reeves, for the public to be braced for tax increases in the budget on 30 October, the data from the Office for National Statistics (ONS) provided evidence of falling inflation and rising real incomes encouraging consumers to spend more freely.

Sales growth in the third quarter of 2024 - a better guide to the underlying trend than one month's figures - rose by 1.9%, compared with a fall of 0.2% in the second quarter. Amid reports that consumer confidence has dropped sharply on fears of a tough budget, the consensus among economists was that retail sales volumes would fall by 0.3% in September.

Retail sales do not include some expensive items of consumer spending - including foreign travel and car sales - but the better-than-expected September figure will be a boost to Reeves as she puts the finishing touches to her budget.