UK Retail Sales Rise in August

LONDON (Reuters) – British retail sales rose by a stronger-than-expected 1% in August, with July's growth also revised up, according to official figures released on Friday.

Economists surveyed by Reuters had anticipated a 0.4% monthly rise in sales volumes last month. The Office for National Statistics (ONS) reported that sales volumes in July increased by a revised 0.7%, improved from the prior estimate of 0.5% month-on-month.

Some supermarkets and clothing retailers attributed the boost to warmer weather and end-of-season sales, as stated by the ONS.

The pound sterling rose immediately following the release of these figures. After a surge in inflation in 2022, which adversely impacted consumer spending power for much of the subsequent two years, several factors—including a slowdown in price growth, faster wage increases, and an interest rate cut by the Bank of England—have contributed to the restoration of some lost living standards.

Despite this positive trend, recent reports from UK retailers indicate that discretionary spending remains under pressure. Fashion retailer Primark reported a decline in underlying sales in its latest quarter. Similarly, Kingfisher, the owner of B&Q and Screwfix, indicated weak demand for kitchens and bathrooms on Tuesday.

Conversely, Next announced on Thursday that it experienced better-than-expected sales in the first six weeks of its second half, citing an improvement in the weather. However, the market for 'big ticket' home furnishing items continues to be challenging.

Consumer sentiment appears to have been affected by comments from the new government under Prime Minister Keir Starmer regarding a tough economic outlook and the potential for higher taxes.

A survey published earlier on Friday revealed a sharp drop in consumer confidence, reaching a six-month low in September.