Gold and iPhones Drive Surprise Rise in UK Retail Sales for September
British retail sales posted a surprise increase in September, rising 0.5% month-on-month and offering a welcome boost to the country’s broader economic growth. The gain came from strong technology sales, including Apple’s new iPhone models, and surging demand for gold from online jewellers, according to data released Friday by the Office for National Statistics (ONS).
Retail Strength Lifts Third-Quarter GDP Outlook
The ONS reported that retail sales growth reached 0.9% in the third quarter, up from 0.2% in the previous quarter. This improvement is expected to add 0.04 percentage points to overall GDP growth, providing rare positive news for an economy widely forecast to slow in the second half of the year.
Economists polled by Reuters had expected a 0.2% decline, making the result a notable upside surprise. Following the report, the British pound strengthened against the U.S. dollar.
Retail activity had already performed solidly over the summer, supported by unseasonably warm weather that lifted clothing and outdoor goods sales.
Tech and Gold Lead September’s Retail Rebound
According to ONS statistician Hannah Finselbach, tech store sales rose sharply in September, while online jewellers benefited from a strong uptick in gold purchases. Gold prices have climbed to record highs in recent weeks, further driving consumer interest.
Retail Volumes Reach Three-Year High
Retail volumes were 1.5% higher year-on-year, the fastest pace since April 2021, while economists had expected just a 0.4% increase. For the full quarter, sales volumes rose 1.0%, marking the highest level since the third quarter of 2022.
The GfK consumer confidence index also showed improvement in October, reaching its joint-highest reading since August 2024.
Economists Warn of Near-Term Challenges
Despite the upbeat data, analysts remain cautious about the outlook for UK retail.
“Against a backdrop of weak employment, high inflation, and looming tax rises, we doubt the sector can sustain this strength,” said Alex Kerr, UK economist at Capital Economics.
Overall consumer spending remains fragile, restrained by a high savings rate, weaker job market conditions, and concerns about potential tax hikes in November’s budget.
Inflation has held steady at 3.8% for three months — nearly double the Bank of England’s 2% target — while wage growth has slowed. Finance Minister Rachel Reeves is expected to unveil at least £20 billion ($27 billion) in tax increases or spending cuts.
Retailer Outlooks Mixed
The retail sector showed mixed performance among major companies. Tesco, the UK’s largest grocer, raised its full-year profit forecast and expressed optimism for a strong Christmas season. In contrast, Greggs reported slower sales growth, and B&M issued two profit warnings within three weeks.
Meanwhile, a Shopify survey revealed that British shoppers plan to spend an average of £181 on seasonal goods such as advent calendars and Christmas decorations, up from £159 last year.
