Retail sales in the UK rebounded by more than expected in October, suggesting consumer activity may be more resilient going into the key fourth-quarter period than recent evidence had shown.
Office for National Statistics data, published on Thursday, showed that month on month, retail sales rose by 0.3% in October, up from September's alarming 0.7% decline, and beating analysts' forecasts of a 0.1% rise.
Annual sales decline
Less encouragingly, the annual rate of sales declined by 0.3%, the biggest annual fall in sales volumes since March 2013, largely because of an exceptionally strong October last year.
Recent data from other sources, however, have continued to suggest slowing growth in the retail sector.
This month's retail sales survey by the British Retail Consortium showed that sales volumes continued to suffer as consumer spending is squeezed by rising inflation and weak wage growth.
Consumer spending squeezed
Indeed, data this week showed that while inflation remained at 3% in October, average annual earnings growth could only manage a 2.2% rate - a negative wage gap of 0.8 percentage points.
Analysts generally put a negative spin on the data.
"With real incomes under pressure from subdued nominal wage growth and rising inflation, it isn’t surprising that spending growth has lost further momentum," said Ruth Gregory at Capital Economics.
She added, however, that the data could be interpreted as consumers cutting back on their spending to spend more in the run up to Christmas.
"There should be scope for retail spending volumes to regain some momentum."
The market reaction was generally positive, however, with the FTSE 100 rising 0.13% to 7,383, while the FTSE 250 added 0.38% to 19,768.
The supermarkets on the FTSE 100 were all in positive territory.