UK September Retail Sales Fall 0.4%, Missing Forecasts and Softening Rate Hike Expectations

UK retail sales volumes fell 0.4% month-over-month in September, missing expectations of a 0.1% decline and clouding the Bank of England's rate outlook. Year-over-year sales slowed to 0.8% against a 1.0% forecast, while core sales excluding automotive fuel dropped 0.7%. Unusually warm weather dented demand for seasonal clothing, dampening spending across non-food stores, supermarkets, and non-store retailers. Despite the September drop, Q3 sales rose 0.7% quarter-over-quarter. Following the release, markets maintained 98% odds of a November Bank of England rate hike, but trimmed December tightening expectations to roughly 45%.