BRC retail sales: September surge was just a blip from Rugby World Cup as October saw slowdown

Retail sales were up just 0.9% in October, a disappointing growth compared to a surge in September, figures from the British Retail Consortium (BRC) showed. Analysts were quick to say that the surge of almost 2% in the September was just a "blip".

Despite the early England exit, the UK hosting the Rugby World Cup undoubtedly helped retail sales in September. With merchandise flying off the shelves and tournament visitors helping the UK economy, the RWC is likely to have lifted sales across the sector.

"Sales volumes in September was just a blip and probably will be largely reversed in October," Pantheon economist Samuel Tombs commented. "September's surge partly reflected consumers stocking up on food and drink during the early stages of the Rugby World Cup tournament."

A highly competitive grocery market has weighed down food prices, causing strong deflation as UK supermarkets try to battle German budget chains Aldi and Lidl. However, the implementation of the living wage in 2016 is expected to raise food prices slightly, as supermarkets deal with higher costs.

"Non-food sales fared better and the BRC reports that consumers might have delayed more purchases than last year on the expectation of generous Black Friday discounting in November, a relatively new phenomenon in the UK," Tombs said.

The numbers published by the BRC are just the newest addition to a list of macroeconomic data showing that the UK is not immune to the global economic slowdown. The economy grew by 0.5% in the third quarter of 2015, down from a 0.7% surge in the second quarter.

The manufacturing slump in the country has caused economists to be worried about the UK's economy. The Organisation for Economic Cooperation and Development downgraded global economic growth on Monday (9 November), and the International Monetary Fund has also said it is worried about the significant slowdown as the economy is entering a critical period of recovery.

The slowing retail sales and global volatility are likely to affect the decisions by both the Federal Reserve in the US and the Bank of England's Monetary Policy Committee on the interest rate. The Fed is more likely to increase the interest rate, although many economists say Janet Yellen's Federal Open Market Committee will likely wait until 2016.