UK retail sales rebounded in August, driven by a recovery in food store sales following a decline in July due to wet weather. According to data from the Office for National Statistics (ONS), retail sales volumes increased by 0.4% month-on-month, reversing the 1.1% decrease seen in July.
However, the figures fell slightly short of expectations, with economists polled by The Wall Street Journal predicting a 0.5% increase. Food store sales volumes rose by 1.2% in August, recovering from a 2.6% fall in July. The ONS reported that supermarkets attributed the decline in July to reduced clothing sales and a decrease in food sales, both of which were impacted by rainy weather.
While August saw some improvement in weather conditions, food sales volumes remain more than 4% below the pre-pandemic level of February 2020. This is likely due to increased cost-of-living pressures and soaring food prices, which continue to put strain on households. Inflation in August stood at 6.7%, unexpectedly lower than July but well above the Bank of England’s 2% target. Food prices were 13.4% higher compared to the same month in 2022.
In a surprising move, the Bank of England decided to hold interest rates steady at 5.25%, providing a relief to households. The decision comes amidst concerns about rising inflation and the impact it may have on the economy.
Meanwhile, sales volumes of automotive fuel declined by 1.2% in August. Retailers attributed this decline to a significant increase in petrol and diesel prices during the period.
Non-food stores experienced a 0.6% growth in sales volumes, partially recovering from decreased footfall caused by the rainy weather in July. However, non-store sales, which primarily consist of online retailers, dipped by 1.3% in August after benefiting from the unseasonable weather.
Looking at the three-month period leading up to August, retail sales volumes increased by 0.3% compared to the previous three months. However, on a year-on-year basis, sales volumes were down by 1.5%.
The August retail sales figures indicate a mixed picture for the UK’s retail sector. While there was a rebound in food store sales, challenges such as rising food prices and increased cost-of-living pressures continue to impact consumer spending. The hold in interest rates by the Bank of England may provide some relief for households. However, uncertainties remain as the retail sector navigates through volatile market conditions and adjusts to changing consumer behaviors, particularly in the online space.
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More detail via MarketWatch here… ( Image via MarketWatch )