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UK Market Insights

Quick Takes - UK Retail Sales Rebound, But Fragile Confidence and Sector Divergence Persist

SR Team - 18 October 2024

As UK retail sales exceed expectations, it's still unclear whether this is a retail renaissance or a false dawn. The unexpected rebound has offered a glimmer of hope however, consumer confidence remains fragile, with UK shoppers tiptoeing through a retail minefield of uncertainty. The impact of a potentially 'painful' budget has been significant, with households growing increasingly anxious about potential tax hikes and spending cuts.

Additionally, the figures reveal a diverging trend across sectors, with computers and telecommunications retailers experiencing strong growth, while supermarkets saw a decline in sales. This mixed performance underscores the uneven nature of the UK’s economic recovery. Despite this stronger-than-expected retail sales data, a rate cut next month is all but guaranteed. There is also considerable scope for a second cut in December, with favourable inflation data driving the MPC’s forthcoming policy stance.