U.K. retail sales drop year-on-year in October, likely to come under further pressure in near-term

Retail sales in the U.K. declined for the first time on a year-on-year basis since March 2013 in October. On a sequential basis, sales rose 0.3 percent, surpassing expectations, but it dropped 0.3 percent year-on-year, showed the Office for National Statistics.

The annual decline in retail sales was because of a strong October last year, when retail sales had grown 7.4 percent. But the degree to which annual sales growth fell from boom to decline over the course of a year underscores the difficulty faced retailers and the extent to which households are being squeezed, said Chris Williamson at IHS Markit.

The on-going double-whammy of increasing prices and subdued pay growth are mainly causing the deterioration in retail sector. Real pay has been in continual decline since February. Meanwhile, food prices are rising at the most rapid rate in four years.

Given that inflation is expected to have peaked either in October or November, the squeeze on household finances might begin to ease in months ahead, providing pay growth does not decline.

The retail sector outlook continues to be highly uncertain, and risks to the downside imply that sales might come under additional pressure in the near-term, added Chris Williamson.

At 15:00 GMT the FxWirePro's Hourly Strength Index of British Pound was neutral at 26.2171, while the FxWirePro's Hourly Strength Index of US Dollar was slightly bearish at -46.0945. For more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex

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