UK retail volumes declined by 1.1 per cent in October compared with the prior month, marking the first monthly fall since May and exceeding expectations of no change.

Year-on-year growth stood at just 0.2 per cent, against forecasts of 1.5 per cent, according to data released by the Office for National Statistics on 21 November.

The retail downturn is accompanied by a broad-based fall in consumer morale, with the GfK survey showing sentiment deteriorated further in November as households brace for the forthcoming budget from Chancellor Rachel Reeves.

Economists suggest that uncertainty over tax rises, welfare cuts and a weak jobs market are curbing spending ahead of the critical festive trading period.

The contraction was most apparent in supermarket food, clothing and mail-order sectors, where some retailers reported that shoppers delayed purchases in favour of upcoming Black Friday deals.

Retail volumes remain 3.3 per cent below their February 2020 pre-pandemic peak.

Additional data highlighted a wider fiscal strain: UK public sector borrowing in October reached £17.4 billion—roughly £10 billion more than previously forecast—raising pressure on the government to plug a fiscal gap of £20–£30 billion through the budget.

Retailers have expressed nervousness that softer consumer demand, coupled with prospective tax and benefits reforms, could weigh heavily on the important November–December shopping season.

With growth more fragile than expected, the upcoming budget may carry increased significance for both consumers and the wider economy.

The data underscore a dual challenge for policy-makers: restoring consumer confidence and preserving household spending power while also addressing larger structural fiscal pressures.