UK retail sales accelerated in August as warmer weather lifted demand for food, furniture and back-to-school goods, though much of the increase was driven by higher food prices, the British Retail Consortium (BRC) reported. Total sales rose 3.1% year-on-year after a 2.5% gain in July, while like-for-like sales were up 2.9%, their fastest pace this year outside of April’s Easter-related surge.
Food sales climbed 4.7% compared with a 1.8% increase for non-food items. The BRC cautioned that retailers remain concerned about consumer confidence heading into Christmas, with uncertainty surrounding the government’s November budget.
Separate figures from Barclays showed consumer spending growth slowing sharply to 0.5% in August from 1.4% in July, as essentials spending fell but discretionary purchases — including a bump from Netflix subscriptions — rose. Barclays said further Bank of England rate cuts would likely be needed to sustain demand, with speculation over fiscal policy adding to uncertainty.
-
The mix of stronger retail sales but softer overall consumer spending highlights resilience in headline activity but underlying fragility in demand. For markets, this may temper GBP upside as fiscal uncertainty and the need for further BoE easing loom, while food inflation pressures remain a focus for bond and rates markets.
