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Have strong retail sales reduced chances of rate cut?

ended 24. October 2025

Retail sales volumes are estimated to have risen by 0.5% in September 2025, following an increase of 0.6% in August 2025 (revised up from a 0.5% rise). This was stronger than expected. Has this reduced the chances of a rate cut before Christmas after this week's stable inflation data and weaker private sector wage growth? 

2 responses from the Newspage community

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Anita Wright
Chartered Financial Planner at Ribble Wealth Management
A one-month rise in sales—helped by product launches and late-summer weather—does not change the interest-rate outlook on its own. It looks seasonal and event-driven, not a lasting shift in demand.
With inflation still elevated, each pound buys less. Bigger takings at the till may reflect higher prices rather than genuinely stronger volumes.
We also do not know how much of this spending comes from spare income versus borrowing. Bank of England figures show consumer credit has been growing, which can support sales for a while without indicating healthier household finances. Taken together, this report does not meaningfully lower the odds of a December rate cut. It simply keeps the Monetary Policy Committee cautious and firmly guided by the next rounds of inflation and labour-market data.
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Kundan Bhaduri
Entrepreneur, Investor and Landlord at The Kushman Group
The retail sales bump we have seen is simply pent up demand from bargain hunters prior to Christmas, not some sustainable economic recovery. Mortgage holders are drowning in refinancing costs as most 3 and 5 Year fixed deals taken out in the early stages of the pandemic are coming to an end. At the same time, businesses are delaying investment because borrowing remains punitively expensive. A December cut will signal confidence in the inflation trajectory while providing genuine relief to property markets that underpin household wealth in our country