Retail sales rose by 0.5 per cent in August, as shoppers were encouraged by summer weather to spend on food and clothing, shows the data from Office for National Statistics (ONS) released today (Sept 19).
The monthly measure for retail sales was in line with expectations and follows a 0.5 per cent expansion in July, revised down from an initial estimate of 0.6 per cent.
Over three months to August sales volumes fell by 0.1 per cent compared with the previous rolling quarter.
Retail sales are a closely watched early indicator of economic growth and August’s monthly expansion is the third consecutive expansion, the ONS said. When excluding fuel sales, volumes rose by 0.8 per cent last month.
Jacqui Baker, head of retail at RSM UK and chair of ICAEW’s Retail Group, comments, “Consumer confidence improved in August likely helped by the Bank of England’s interest rate cut, but fell back in September.
"The combination of rising inflation, falling pay growth, little chance of another interest rate cut this year, and ongoing budget speculation, could further drag on consumer confidence and in turn, retail sales.
“As a result, the prospect of a booming Golden Quarter is looking less likely unless the government is able to offer a boost in the budget, particularly as retailers expect to see an update on the long-awaited and much-needed business rate reform."
Several analysts credited the good weather as one of the reasons for the August bounce-back.
Hannah Finselbach, senior statistician at the ONS, said retailers had said sales had probably been boosted by good weather last month.
Sagar Shah, at McKinsey & Company, said retailers had benefited from shoppers “grabbing end-of-season bargains and parents shopping for the new academic year”.
Oliver Vernon-Harcourt, head of retail at Deloitte, said retailers were heading into the final months of the year, known as the “golden quarter” leading up to Christmas.
“The change of the seasons in September should no doubt encourage consumers to purchase items for their winter wardrobes, but many businesses will be hoping that rain doesn’t deter shoppers from the high street,” he said.
Phil Monkhouse, UK country manager at financial services firm Ebury, agreed, but added a warning note.
“Retailers enjoyed another summer sales boost in August, helped by warm weather, school holidays and the Bank of England’s recent rate cut, which buoyed consumer sentiment," he said.
“However, this positivity could soon shift if inflation continues to run hot and interest rates remain elevated.”