The ugly truth about inflation is households are having to pay more, to buy less.
We have seen this in a number of data points, the most recent is from the UK, where the Office of National Statistics just released their latest data for October. It revealed that UK retail sales fell unexpectedly, adding to the impression that a string of interest-rate hikes designed to beat down inflation is beginning to stymie economic activity.
This is an early indication that overall economic output will probably be weak in the fourth quarter.
Economists were expecting a rise of 0.4% for October. Instead, sales fell to their lowest since February 2021 when Covid restrictions were in place, with retailers citing the cost-of-living crisis and bad weather for the poor performance. It bodes ill for the “golden quarter,” the run-up to Christmas when stores can make a majority of their yearly profits.
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