Danni Hewson, AJ Bell head of financial analysis, comments on the latest UK retail sales figures.
She said: “Inflation might be falling and there may have been plenty of headlines suggesting the cost-of-living crisis could finally be coming to an end, but households are still wary about spending cash.
“Retail sales have fallen to the lowest level since February 2021, when the country was in the middle of the third national lockdown. Many stores had to keep their doors closed and those that could open had strict social distancing measures in place. Many workers were once again furloughed, kids were off school, and confidence was badly shaken.
“Fast forward a couple of years and these numbers are particularly concerning for retailers because this isn’t February 2021, these numbers were for the month of October when consumers traditionally begin their Christmas shopping.
“The question at hand is are we saving up our cash, squirrelling it away in order to make the most of those big promotional days like Black Friday, or have price pressures pushed people to rethink Christmas plans entirely?
“What is particularly interesting is the food sector. Even here spending is down but it’s where that spend has fallen which alludes to the impact rising mortgage costs are having on middle income families.
“Supermarkets which offer value brands and own label deals maintained a bit of growth, but speciality stores like butchers and artisan bakers saw trade drop off.
“Little luxuries are an affordable ray of sunshine, but everyday sustenance is another thing entirely and it’s hard to justify an ancient grain loaf when a couple of slices from a pre-packaged one does the job at a fraction of the price.
“And posh alcohol makers like LVMH have already noted that sales have fallen away as drinkers plump for cheaper labels.
“The weather has undoubtedly played a part. Whether unseasonably warm or disruptively stormy, our purchasing decisions are often based on need, especially at the moment.
“Online sales did get a bit of a boost although the value of these sales was down as shoppers sought out any offers and discounts that would help their budgets go further.
“People are still spending but they’re thinking long and hard about what they buy.
“Jewellery and watches seem to be destined for a spot under this year’s Christmas tree, but if the trend continues, stockings will a bit lighter this year with people choosing one thoughtful purchase over many.”
