Retailers had their best month for sales in more than a year, according to a CBI survey.
The balance of companies that reported a rise in sales in October compared with the same month last year rose to +28, the strongest pace of growth since September last year and up from -8 in September.
Retailers reported that growth was driven by shoppers buying winter clothes after the unusually warm weather in September.
Rain Newton-Smith, chief economist at the CBI, said: “With our Indian summer now a distant memory, shoppers have been pounding the high street with sales of clothing and other retailers outpacing expectations.”
The survey is the first good news for the clothing sector in recent weeks after leading high street names, such as Next and Debenhams, reported challenging trading. Shoppers had been spending more on holidays and recreational activities.
However, Paul Hollingsworth, an economist at Capital Economics, said there were problems in store for retailers. “While the labour market appears to have fared well in the immediate aftermath of the Brexit vote, we expect a more significant slowdown in employment growth in the coming quarters, and nominal wage growth is likely to remain subdued too. At the same time, inflation is set to pick up quite sharply over the coming months.”
The CBI survey of 60 retailers contrasts with a report from the British Retail Consortium this week which found that the number of jobs in the sector was rapidly declining, down 3 per cent in the third quarter and by 2.4 per cent in the second quarter.
Consumer confidence about the future of the economy also appeared to dip this month, according to a closely watched poll from GfK, the market research group.
It found that while confidence about personal finances for the next year dropped by one point between September and October, confidence in the general economic situation for the next 12 months fell by 8 points to -17.
Joe Staton, head of market dynamics at GfK, said consumers were becoming increasingly concerned about the prospect of a rise in inflation and the renewed fall in the pound this month on the back of fears about Hard Brexit.
“We are much more engaged with this type of thing than we have been for a long while; the general feeling in the country is that the pound in your pocket is weaker than it was,” he said.
“We have control over our personal finances, we know what our bills are and that interest rates are low, but the global economic situation feels out of our control and uncertain. It’s this uncertainty that is colouring the index.”
Mr Staton said that consumers’ fears about inflation had doubled compared with last year, worsened by events such as Unilever’s clash with Tesco over price increases. A GfK poll found that 24 per cent of people said they expected consumer prices to rise more rapidly in the next 12 months. This compares with just 11 per cent who thought the same a year ago.
Mr Staton said this might be why GfK’s “major purchase” index had risen to 14, the highest level since January. “People think prices are going to increase due to news about imports becoming more expensive and are buying big items like washing machines now.”
