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- UK retail sales are expected to have edged modestly higher in September with consensus looking for a +0.6%M/M print including fuel and +0.3%M/M print excluding fuel.
- Disappointing accounts from industry insiders suggest a degree of downside risk to that outlook, according to the MNI Policy team's latest Reality Check (click here).
- Indeed only half of the economists in the Bloomberg survey look for an including fuel print between 0.6-1.0%M/M, with 4/18 analysts looking for a negative print and two looking for a print in excess of 1.5%.
- Even a surprise to the upside is unlikely to prevent retailing from exerting a negative influence on overall third quarter output. After falling by 0.9% in August -- extending a 2.8% plunge in July -- sales must rise by an almost-unprecedented 12% in September to keep volumes in the black in the third quarter.
- Analysts expect overall sales to rise by 0.6% m/m, with ex-fuel sales up 0.3% m/m. On year, total sales are expected to be 0.4% lower than September 2020, with ex-fuel sales lower by 1.6%.
- Petrol sales are a wildcard in the September data. While many drivers – particularly in the southeast – were unable to fill up their tanks, others may have purchased higher volumes than usual following reports of shortages, due to a paucity of HGV drivers.
- Furthermore, widespread coverage of shortages may have dampened consumer confidence, according to some industry leaders. That was backed up by overnight data from GFK, which showed UK consumer confidence slump to -17 from -13 in September and -8 in August.
- Although this will be the best indication of the state of the consumer in September, we don't think it will sway the MPC either way at the November MPC meeting, with any weakness able to be attributed to less consumer shopping trips during the petrol "crisis" and any strength unlikely to push any of those hesitant to hike into the hiking camp. For this reason we expect little market reaction.