UK Retail Sales Fall More Than Expected; World Bank warns of global recession – business live | business

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Retail sales volumes in Great Britain slumped by 1.6% in August from July – much worse than expected.

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Economists had expected a 0.5% drop. The sharp decline came after an upwardly revised 0.4% rise in July.

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The Office for National Statistics, which released the figures, said all main sectors (food stores, non-food stores, online retail, and fuel) fell over the month; this last happened in July 2021, when all legal Covid restrictions on hospitality were lifted and people headed out to bars and restaurants.

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Sales at supermarkets and other food stores were down 0.8% in August, which leaves them 1.4% below their pre-pandemic levels in February 2020. However, alcohol and tobacco sales rose, by 6.3%, as people sought relief from the cost of living crisis. Petrol and diesel sales fell 1.7%, despite a fall in prices.

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Sales at department stores fell by 2.7%, while household goods stores posted a 1.1% fall, mainly because of declines in furniture and lighting stores. Feedback from retailers suggests that consumers are cutting back on spending because of increased prices and affordability concerns.

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At clothing stores, sales volumes fell by 0.6% in August and were 5.7% below their February 2020 levels.

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The proportion of retail sales online fell to 25.7% from 26.3% in July; but it remains significantly above pre-coronavirus levels, when it was 19.8%.

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The world looks to be edging toward a global recession as central banks are forced to hike interest rates to fight high inflation, the World Bank has warned.

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The world’s three largest economies – the United States, China and the eurozone – have been slowing sharply, and even a “moderate hit to the global economy over the next year could tip it into recession,” the bank said in a new study.

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It said the world economy was now in its steepest slowdown following a post-recession recovery since 1970, and consumer confidence had already fallen more sharply than in the run-up to previous global recessions.

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Expressing concerns that these trends would persist, with damaging consequences for emerging market and developing economies, World Bank President David Malpass said:

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Global growth is slowing sharply, with further slowing likely as more countries fall into recession.

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The Agenda

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  • 10am BST: Eurozone inflation for August, final estimate (forecast: 9.1%)

  • \n

  • 10am BST: Italy inflation for August, final estimate (forecast: 8.4%)

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  • 3pm BST: US Michigan consumer sentiment for August

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key events

Good morning, and welcome to our rolling coverage of business, the world economy and the financial markets.

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Retail sales volumes in Great Britain slumped by 1.6% in August from July – much worse than expected.

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Economists had expected a 0.5% drop. The sharp decline came after an upwardly revised 0.4% rise in July.

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The Office for National Statistics, which released the figures, said all main sectors (food stores, non-food stores, online retail, and fuel) fell over the month; this last happened in July 2021, when all legal Covid restrictions on hospitality were lifted and people headed out to bars and restaurants.

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Sales at supermarkets and other food stores were down 0.8% in August, which leaves them 1.4% below their pre-pandemic levels in February 2020. However, alcohol and tobacco sales rose, by 6.3%, as people sought relief from the cost of living crisis. Petrol and diesel sales fell 1.7%, despite a fall in prices.

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Sales at department stores fell by 2.7%, while household goods stores posted a 1.1% fall, mainly because of declines in furniture and lighting stores. Feedback from retailers suggests that consumers are cutting back on spending because of increased prices and affordability concerns.

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At clothing stores, sales volumes fell by 0.6% in August and were 5.7% below their February 2020 levels.

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The proportion of retail sales online fell to 25.7% from 26.3% in July; but it remains significantly above pre-coronavirus levels, when it was 19.8%.

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The world looks to be edging toward a global recession as central banks are forced to hike interest rates to fight high inflation, the World Bank has warned.

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The world’s three largest economies – the United States, China and the eurozone – have been slowing sharply, and even a “moderate hit to the global economy over the next year could tip it into recession,” the bank said in a new study.

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It said the world economy was now in its steepest slowdown following a post-recession recovery since 1970, and consumer confidence had already fallen more sharply than in the run-up to previous global recessions.

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Expressing concerns that these trends would persist, with damaging consequences for emerging market and developing economies, World Bank President David Malpass said:

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Global growth is slowing sharply, with further slowing likely as more countries fall into recession.

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The Agenda

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  • 10am BST: Eurozone inflation for August, final estimate (forecast: 9.1%)

  • \n

  • 10am BST: Italy inflation for August, final estimate (forecast: 8.4%)

  • \n

  • 3pm BST: US Michigan consumer sentiment for August

  • \n

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filter BETA

“Buyers simply buy less to compensate for price increases,” he says Lisa Hooker, industry leader for consumer markets at PwC. She explains:

For the first time, without the impact of inflation, grocery sales volumes actually fell below pre-pandemic levels, showing shoppers are wasting less and being forced to be more careful about what they put in their shopping carts.

Other categories such as fashion also fell below pre-pandemic levels, despite a resurgence earlier in the summer as consumers rushed to shop for new outfits for the workplace, and celebrations and events that were postponed due to the pandemic.

As we approach the critical Golden Quarter in the run-up to Christmas, retailers will be looking forward to the outcome of next week’s mini-budget. Confirmation of an energy price cap and the possibility of tax cuts could boost faltering consumer spending, but businesses will also seek help to mitigate their own rising utilities. Add to this the inflation in input costs and wage increases they are already struggling with.

Longer term, the high street will also be on the lookout for signs of corporate interest rate reform, with indexing likely to offset any revaluation benefit and increase costs from next year.

Retail Sales in the United Kingdom decreased 1.60 percent in August of 2022 over the previous month. https://t.co/EwoFoJWCbm pic.twitter.com/mi5PXddhIt

— Trading Economics (@tEconomics) September 16, 2022

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The sharp fall in UK retail sales suggests “the economy is already in recession,” says Olivia Cross, associate economist at Capital Economics.

Retail sales are likely to continue to struggle as the cost of living crisis hits harder in the coming months. But the Bank of England will still have to raise interest rates aggressively.

The decline in retail sales in August more than reverses the revised up 0.4% monthly increase in July. Sales volumes fell in all major categories and the ONS reported that high prices prompted households to rein in spending. And that ties in well with consumer confidence falling to its lowest level since records began in August. For example, fuel sales fell 1.7% in August despite a sharp 6.2% drop in fuel prices.

With CPI inflation not yet peaking, it will continue to weigh on real incomes and consumer spending in the coming months. However, the potentially huge fiscal expansion from the government’s energy price guarantee will provide significant support for households and consumer spending going forward.

We now expect the recession to be shallower and shorter than before, which is one of the reasons why we expect the Bank of England to hike rates further than we expected, to a peak of 4.0% (previously 3.0%) must increase. , consensus 2.5%).

The World Bank also warned that global core ex-energy inflation could remain around 5% next year, nearly double the five-year pre-pandemic average, unless supply disruptions and labor market pressures abate.

To bring inflation down, central banks may need to raise interest rates by another 2 percentage points, on top of the two points already raised, it said. But an increase of this magnitude, coupled with financial market stress, would slow global GDP growth to 0.5% in 2023, or a 0.4% per capita contraction, which would fit the technical definition of a global recession.

Malpass urged policymakers to shift their focus from reducing consumption to increasing production, including efforts to capture additional investment and productivity gains.

Previous recessions have highlighted the risk of prolonged high inflation amid weak growth, the bank said, noting that the 1982 recession triggered more than 40 debt crises and ushered in a decade of lost growth in many developing countries.

World Bank Vice President Ayhan Kose said recent monetary and fiscal tightening would help tame inflation, but as it’s happening in multiple countries at once, it could exacerbate the global growth slowdown.

The report suggested central banks could fight inflation without triggering a global recession by clearly communicating their policy decisions, and also called for credible medium-term fiscal plans and more targeted relief for vulnerable budgets.

David Malpass, President of the World Bank Group. Photo: Issei Kato/Reuters

Introduction: UK retail sales fall sharply; World Bank warns of global recession

Good morning and welcome to our ongoing coverage of business, the global economy and financial markets.

UK retail sales fell 1.6% in August vs. July – much worse than expected.

Economists had expected a minus of 0.5%. The sharp drop came after an upwardly revised 0.4% rise in July.

The Office for National Statistics, which released the numbers, said all major sectors (grocery stores, non-food outlets, online retail and fuel) fell over the month; This last happened in July 2021 when all legal Covid restrictions on hospitality were lifted and people went to bars and restaurants.

Retail sales in the UK
Retail sales in the UK Photo: ONS

Sales at supermarkets and other grocery stores fell 0.8% in August, down 1.4% from their pre-pandemic February 2020 level. However, sales of alcohol and tobacco rose 6.3% as people sought relief from the cost of living crisis. Gasoline and diesel sales fell by 1.7% despite falling prices.

Department store sales fell 2.7%, while home goods stores declined 1.1%, mainly due to declines in furniture and lighting stores. Feedback from retailers suggests that consumers are cutting back on spending due to increased prices and affordability concerns.

Sales volumes in clothing stores decreased by 0.6% in August, falling 5.7% from February 2020 levels.

The share of online retail sales fell to 25.7% from 26.3% in July; but it remains well above pre-coronavirus levels when it was 19.8%.

The world appears headed for a global recession as central banks are forced to hike interest rates to combat high inflation, the World Bank has warned.

The world’s three largest economies — the United States, China and the euro zone — have slowed sharply, and even a “moderate hit to the global economy next year could plunge it into recession,” the bank said in a new study.

The global economy is now at its worst slowdown since the 1970s post-recession recovery and consumer confidence has already fallen more than in the run-up to previous global recessions.

World Bank President David Malpass expressed concern that these trends would continue, with damaging consequences for emerging and developing economies:

Global growth is slowing sharply, with a further slowdown likely as more countries slide into recession.

The agenda

  • 10am BST: Eurozone Inflation for August Final Estimate (Forecast: 9.1%)

  • 10am BST: Italy Inflation for August Final Estimate (Forecast: 8.4%)

  • 3pm BST: US Michigan consumer sentiment for August

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