UK retail sales recover in August

UK retail sales returned to growth last month, helped by toiletries and cosmetics as consumers purchased holiday essentials for their late summer getaways.

Retail sales volumes grew 0.4% in August, up from a revised fall of 1.1% in July, according to the Office for National Statistics (ONS).

It comes in slightly below expectations after economists had predicted a 0.5% rise for August, according to a consensus from Pantheon Macroeconomics.

Retail sales grew 0.4% in August 2023, partially recovering from a revised fall of 1.1% in July 2023.

When we look more broadly, sales rose 0.3% in the 3 months to August when compared with the previous 3 months.

➡️ https://t.co/GmTxquZPSs pic.twitter.com/ZEkacznE20

— Office for National Statistics (ONS) (@ONS) September 22, 2023

Warmer weather in August lured shoppers back on to the high street, meaning that online shopping dwindled.

Non-store retailers, which predominantly means online stores, reported a 1.3% fall in sales volumes following a rise of 1.9% in July amid rain showers and online promotions boosting spending.

Heather Bovill, Senior Statistician at ONS, said: "Retail recovered a little from the large fall seen in July, driven by a partial bounce back in food and a strong month for clothing, though sales overall remain subdued.

"These were partially offset by internet sales, which dropped slightly as some people returned to shopping in person following a very wet July.

"Fuel sales also fell, with increased prices hitting demand."

But the value of spending continues to soar above pre-pandemic levels, while volumes have fallen short. It means that people are spending more money but getting fewer items in their baskets.

Compared with the pre-COVID level in February 2020, total retail sales were 17.3% higher in value terms but volumes were 1.5% lower, the ONS revealed.

Compared with the previous month, the amount people spent grew by 0.8% in August.

UK inflation has eased in recent months but prices continue to rise, especially across food items where inflation remains well in double-digits.

Helen Dickinson, CEO of the British Retail Consortium, said: "Returning consumer confidence helped retail sales regain lost ground after a challenging July.

"Toiletries, cosmetics and books performed particularly well as consumers purchased holiday essentials for their late summer getaways.

"Although white goods and other big-ticket items continued to take a hit as households spent more cautiously.

"The next few months are vital for retailers as they gear up for the all-important Christmas trading."

Erin Brookes, the European retail lead at Alvarez & Marsal, said: "While consumer confidence will no doubt be boosted by news that inflation is slowing, retailers will still need to be laser-focused on delivering value for their customers.

"The cost-of-living crisis will continue to bite as energy bills and mortgage payments weigh on household budgets, meaning savvier shopping into the festive season."