UK retail sales bounced back in August with online, department store and food sales helping to drive a stronger-than-expected rise in consumer spending.
Sales volumes increased 0.5 per cent month on month, according to the latest Office for National Statistics figures, reversing the decline recorded in July.
The rebound offered the industry some encouragement at the end of the summer, although industry analysts warned that pressure on household finances could weigh on spending in the months ahead.
Phil Monkhouse, UK country manager at global financial services firm Ebury, said: “August saw a late-summer boost in retail sales, with volumes rebounding from July’s fall. While the stronger performance offers some encouragement for retailers, the wider spending environment remains challenging.”
He added that inflation, higher operating costs and pressure on disposable incomes were creating a difficult backdrop as retailers move into the autumn trading period.
“Higher operating and employment costs, elevated energy and fuel prices and continued global uncertainty are piling on the pressure,” Monkhouse said.
Andy Carlisle, consumer goods and retail lead at Accenture, said the recovery would still come as “a slight disappointment” to retailers hoping for a stronger end to the summer.
“Spending lost momentum as the boost from the earlier hot weather faded, and rising household costs encouraged shoppers to tighten their purse strings, with demand for food and essentials failing to translate into broader growth across the sector,” he said.
Carlisle warned that higher energy bills, food, fuel and transport costs were prompting shoppers to focus more heavily on everyday essentials and exercise greater caution around discretionary and big-ticket purchases.
Looking ahead to the golden quarter, he said retailers would need to stimulate demand without becoming overly reliant on widespread discounting.
“With household budgets under pressure and demand increasingly difficult to predict, retailers that combine compelling value with better use of customer data and AI to target promotions, personalise offers and anticipate demand will be best placed to win,” Carlisle added.
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