UK retail sales volumes increased unexpectedly in August, rising 0.5 per cent month on month and providing a boost for retailers ahead of the crucial Golden Quarter.
The latest figures from the Office for National Statistics (ONS) showed sales volumes were 2.4 per cent higher than in August 2025. The monthly increase was significantly stronger than the 0.2 per cent fall economists had forecast.
Growth was broad-based, with department stores recording a 1.8 per cent increase in sales volumes, while non-store retailing rose 1.7 per cent and clothing and footwear sales increased 1.1 per cent.
The stronger-than-expected performance comes as retailers head into the key autumn and Christmas trading period, although rising inflation and energy costs are expected to put pressure on household spending.
Jacqui Baker, partner and head of retail at RSM UK, said the figures reflected a “summertime boost” as consumers took advantage of the heatwave.
“With increases across the board, and department stores and clothing in particular seeing a welcome boost, the hope is that this momentum continues,” she said.
However, Baker warned that the improvement in retail sales comes against a deteriorating household spending backdrop.
“As inflation ticks up and energy prices increase, the cost-of-living squeeze looks set to intensify,” she said.
RSM UK's Consumer Outlook found that the proportion of disposable income left after essentials for families fell from 29 per cent in November last year to 22.8 per cent in August – its lowest level over the period.
Baker said this was particularly significant because families play an important role in driving consumer spending.
“Families drive volume across the consumer-led economy, so when they come under pressure, the ripple effects are felt across all consumer businesses,” she said.
She added that retailers and consumers would be watching the Autumn Budget for measures to ease cost-of-living pressures and support spending ahead of Christmas.
The figures could also add to pressure on the Bank of England to raise interest rates. The Bank held its rate at 3.75 per cent on Thursday but warned that inflation could peak above 4 per cent early next year, with borrowing costs potentially rising if the conflict involving Iran puts further pressure on energy prices.
On Wednesday, ONS data showed a 3.1 per cent increase in the Consumer Prices Index in the 12 months to August, up from 2.9 per cent the previous month, as the Middle East war drove up fuel prices.
Thomas Pugh, chief economist at RSM UK, said the August figures suggested consumer spending had remained resilient despite higher oil prices.
“The rebound in retail sales volumes in August suggests consumers continued to spend through the end of the summer, despite rising oil prices and the hangover from the World Cup,” he said.
Pugh said the data was positive for third-quarter economic growth, but warned that continued consumer demand could make it easier for businesses to pass higher input costs on to customers.
“That dynamic makes an interest rate hike more likely later this year,” he said.
Looking ahead, Pugh said higher inflation and potential increases in borrowing costs would put further pressure on disposable incomes, leaving the Autumn Budget as a key factor for consumer spending.
“Measures to reduce the cost of living will support consumer spending, but big tax rises will hit confidence and disposable incomes,” he said.