UK Retail Sales Rise

LONDON (Reuters) – British retail sales rose by a stronger-than-expected 1% in August, with July’s growth revised upward to 0.7% from 0.5%.

Economists had predicted a 0.4% monthly increase in sales volumes. The Office for National Statistics reported improvements due to warmer weather and end-of-season sales from supermarkets and clothing retailers.

Following the announcement, the pound sterling strengthened.

After a surge in inflation in 2022 negatively impacted consumer spending, factors such as slowing price growth, rising wages, and a Bank of England interest rate cut have helped restore some living standards.

Despite this, UK retailers report ongoing pressure on discretionary spending. Primark noted a decline in UK sales, while Kingfisher (owner of B&Q and Screwfix) indicated weak demand for kitchens and bathrooms.

Conversely, Next reported better-than-expected sales in the first six weeks of its second half, attributing this to improved weather. However, ‘big ticket’ home furnishing items remain a challenging market.

Consumer concerns have amplified following comments from Prime Minister Keir Starmer’s government regarding the tough economic outlook and potential tax increases. A recent survey showed consumer confidence dropping to a six-month low in September.