Retail sales momentum held strong last month as consumer spending and high street footfall was boosted by the hottest summer on record and an interest rate cut.
Total retail sales rose 3.1 per cent in August, closely watched figures from the British Retail Consortium (BRC) show.
The year-on-year uptick for total sales across the UK was up on last August’s 1 per cent and the 12-month average of 2 per cent.
But retailers will be bracing for the crucial golden quarter in the run-up to the end of the year, with hurdles including a later-than-expected Budget taking place on 26 November.
‘With the later-than-expected Budget falling just days before Black Friday, many are uneasy about how consumer confidence and spending could be impacted by tax rise speculation in the run-up to Christmas,’ says Helen Dickinson, chief executive of the BRC.
Retail sales grew 3.1 per cent in August boosted by the hottest summer on record
Food sales increased by 4.7 per cent year-on-year, against last August’s growth of 3.9 per cent and above the 12-month average growth of 3.3 per cent.
This was mainly driven by food inflation, which was up more than 4 per cent over the month, rather than increasing volumes.
Food price inflation rose sharply over the summer reaching 4.9 per cent in July, driven by staples like beef, chocolate, and coffee.
Non-food sales increased by 1.8 per cent against a decline of 1.4 per cent a year ago, with sales of home goods seeing monthly increases since the spike in property transactions before the Stamp Duty changes in April.
Shopper confidence fell for the third consecutive month to minus one, with many expecting food prices to climb even further.
Sarah Bradbury, chief executive of the Institute of Grocery Distribution (IGD), said: ‘The emotional weight of rising energy bills and fears of tax hikes in the autumn Budget are adding to the strain, especially as unemployment ticks upward.’
Seperate figures from Barclays suggest consumer card spending grew just 0.5 per cent year-on-year in August, down from 1.4 per cent in July.
Essential spending fell, but discretionary spending rose 2 per cent as clothing, furniture and health and beauty stores all performed well, according to the bank’s figures.
Jack Meaning, chief UK economist at Barclays, says: ‘The outlook for the rest of the year remains subdued, particularly as Budget speculation is likely to add to uncertainty for both households and businesses.
‘In our view, it will take further interest rate cuts to provide the economy with a sustained boost.’
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