UK retail sales rose by 1% in August, surpassing economists' forecasts of a 0.4% increase, according to official data released on Friday. The Office for National Statistics

(ONS) also revised July’s growth upwards to 0.7%, from an earlier estimate of 0.5%.

The ONS attributed part of the August boost to warmer weather and end-of-season sales, which benefited some supermarkets and clothing retailers. In response to the data, the British pound saw an immediate rise.

Factors Influencing Sales

After a surge in inflation in 2022 that eroded consumer spending power for nearly two years, a combination of slowing price growth, rising wages, and a recent interest rate cut by the Bank of England has helped to improve living standards.

Despite these gains, reports from UK retailers suggest that discretionary spending remains weak. Fashion retailer Primark reported a decline in underlying UK sales in its latest quarter, while home improvement chains B&Q and Screwfix, owned by Kingfisher, noted weak demand for kitchens and bathrooms.

However, clothing retailer Next announced better-than-expected sales in the first six weeks of its second half, citing improved weather conditions. Yet, they also reported that demand for big-ticket home furnishings continues to struggle.

Consumer Sentiment

Consumer confidence remains fragile, with a survey published on Friday showing a sharp decline in confidence to a six-month low in September. The drop may be linked to concerns over the economic outlook and potential tax increases under the new government of Prime Minister Keir Starmer. Photo by Roy Hughes, Wikimedia commons.