Retail sales rise to two-year high in August

British shoppers spent big on food, summer clothing, and end-of-season sales last month, boosting high street retail sales to a two-year high in August.
Official measures of annual retail sales volumes rose by 2.5 per cent last month, higher than expectations of a rise of 1.5 per cent, and the best performance since July 2022. Sales volumes accelerated from the 1.4 per cent recorded in July and rose by 1 per cent on a month-on-month basis. July’s monthly figure was also revised up to 0.7 per cent from an initial estimate of 0.5 per cent.
Retail sales volumes are used as a measure of the economy’s growth performance, with the strong August likely to raise GDP estimates for the third quarter which runs from July to September.
The Office for National Statistics said consumers spent more on food, clothing, footwear and household goods last month, helped along by discounting at the close of the summer season.
“Supermarkets in particular, contributed to the largest annual rise for food sales since the summer of 2021,” Grant Fitzner, chief economist at the ONS said. “Looking at the broader picture, retail sales have also increased across the three-month and annual period, following strong growth from online retailers. However, sales overall remain slightly below their pre-pandemic level.”
Food spending rose by 1.6 per cent over the year, boosted by another drop in food price inflation in August to 1.2 per cent. Supermarkets also enjoyed their best month since July 2021, the ONS said.
Consumer spending is on course to rise over the coming 12 months as households get a further boost from lower inflation and falling interest rates. The Bank of England held the base rate at 5 per cent on Thursday but is expected to carry out one more rate cut before the end of the year, according to financial market expectations.
Overall household spending has not yet recovered to pre-pandemic levels, putting the UK behind other economies like the US, where consumer expenditure has driven growth higher since 2022.
Erin Brookes at Alvarez & Marsal said: “Looking ahead, retailers will be pleased to see the arrival of the cooler autumnal weather, which should encourage spending on new season stock, especially in apparel.”