Rugby euphoria sees uplift in U.K. Q4 15 private consumption

U.K. retail sales growth (in volumes) accelerated to 1.9% m/m in September, far exceeding both our and consensus forecasts, while the August numbers were revised downward by 0.6pp. Barclays notes, the ONS press release that historical revisions to the series were "primarily caused by re-referencing the indices to 2012 = 100 to align with the National Accounts estimates (only affecting volume data) and the annual seasonal adjustment review".

Meanwhile, retail sales prices dipped further across all sectors, steepening to -3.7% y/y. In line with the recent trend, fuel products remained the chief negative driver (-14.4% y/y, -1.5pp contribution), echoed by muted CPI from low oil prices, while non-food and food retail prices (-1.0pp and -0.8pp) also delivered significant negative contributions.

Although today's print is a positive surprise, it is temporary, with anecdotal evidence from the ONS pointing to much of it arising from the Rugby World Cup, and is thus likely to create volatility. TOf more concern, however, is that the September 3mma/3mma figure is only marginally above its August print, indicating that had the Rugby World Cup not been hosted in the UK, trend weakness would have worsened. The strong print also suggests some volatility to come in private consumption. 

The Rugby World Cup spans September and October and as such may artificially lift October's print too. It is expected to support the private consumption to increase to 0.6% q/q in Q3 15 from an upwardly revised 0.9% q/q in Q2, it leaves the total retail sales carry-over for Q4 15 at 1.1% q/q (from 0.8% q/q in Q3), its highest since Q4 14, argues Barclays.