LONDON, (Reuters) - British shoppers grew more cautious about their spending in the three months to September despite enjoying real growth in their wages, raising concerns about the health of the economy in the run-up to Brexit.
Consumer spending has been the biggest driver of British economic growth since June 2016's referendum to leave the European Union, but there have been increasing signs that this is starting to soften.
Monthly retail sales volumes were flat in September and annual sales growth picked up to 3.1% from a weak 2.6% in August, the Office for National Statistics said on Thursday - slightly less of a recovery than economists had forecast in a Reuters poll.
Looking at the third quarter as a whole, which strips out monthly volatility, quarterly sales growth held steady at 0.6% while the annual pace of expansion dropped to 3.1% from 3.6%, the weakest growth since the final quarter of 2018.
"Food shops bounced back after a weak few months, but there was yet more bad news for department stores, with sales continuing to fall in September," ONS statistician Rhian Murphy said.
Some retailers also said bad weather had hurt demand too, the ONS added.
Sales in the 'non-specialized stores' category - which includes department stores - dropped by an annual 2.0% in the third quarter, the biggest decline since the first three months of 2009 when Britain was mired in recession.
The figures chime to a degree with a British Retail Consortium survey that showed the biggest fall in retail spending of any September since at least the mid-1990s.
In recent months, surveys by the BRC and Confederation of British Industry have painted a weaker picture of the retail sector than subsequent official data - in part due to the former focusing more on large high-street chains.
The ONS data has a broader sample that includes more online and small retailers, though it too is frequently volatile on a monthly basis.
The ONS's measure of retail spending showed annual sales growth slowing to 3.5% in the third quarter from 4.1% in the second quarter, its weakest growth rate in more than three years.
Until recently consumers appeared to have largely taken Brexit in their stride, helped by weaker inflation and stronger growth in wages which are rising at the fastest pace in more than a decade.
That has aided the world's fifth-biggest economy at a time when many companies have been cutting back on investment because of uncertainty about Brexit.
But there have been signs that consumers are turning more cautious as Britain's political crisis drags on.
Several British retailers, including supermarkets Asda (N:WMT) and Morrisons (L:MRW) and home improvement group Kingfisher (L:KGF), have highlighted the drag of Brexit uncertainty on bigger ticket sales.
But clothing retailer Next (L:NXT) attributed a disappointing start to autumn trading to unusually warm weather in parts of Britain, rather than shoppers holding back on buying new items because of Brexit.