Confident consumers boost retail sales in August

Rising consumer confidence boosted retail sales in August as slowing inflation offered some hope for the all-important Christmas season.

Total UK retail sales were up 4.1% on last August, above the three-month average of 3.6%, according to the British Retail Consortium (BRC)-KPMG Retail Sales Monitor.

Health, beauty and food and drink were the strongest performing categories, both on the high street and online, as consumers made the most of brief spells of sunshine to enjoy the summer holidays.

But internet retailers continued to struggle as online sales fell yet again in August, dropping by 3% year on year.

However not all areas benefited, with clothing and footwear seeing weaker growth as families held back spending on children’s uniforms and other back-to-school goods until the last minute.

The overall sales figures reflected an improvement in consumer confidence in August, with retailers hoping the trend will continue as shoppers turn their thoughts to Christmas preparations.

BRC chief executive Helen Dickinson said: “Easing inflation will certainly be welcomed by consumers, but, as the rate of price rises falls, so will the extra spending needed by consumers.

“As a result, sales growth may fall in the coming months, even if volume growth does not.

“Furthermore, high interest rates and high winter energy bills will put pressure on many households to spend cautiously.”

Paul Martin, UK head of retail at KPMG, said: “As summer comes to an end, retailers will have their sights firmly set on the most crucial period of trading as consumers get ready for Christmas.

“Inflation levels are heading in the right direction, albeit much more slowly than hoped, and savvy shoppers will be Christmas bargain-hunting much earlier this year, as price continues to drive decisions and consumers seek out good deals to stretch their budgets.

“Having survived the pandemic and continuing to battle through the cost-of-living crisis, we are already starting to see the resilience of the sector begin to fade and high street casualties are starting to emerge.

“Maintaining consumer confidence as we head into the golden quarter will be absolutely vital for some in the sector, who will need a good Christmas in order to continue trading in 2024.”

Institute of Grocery Distribution chief executive Sarah Bradbury said: “Despite the disappointing summer weather, August saw food and drink sales recovering some momentum that was lost in July. The progress of the Lionesses in the World Cup brought cheer to consumers and an excuse for get-togethers around game times.

“However, inflation remains the dominant driver of headline growth in the sector and, although lower now than the peaks seen a few months ago, it remains high by historical standards.”