Food spend drives retail sales growth in August, but consumers still cautious

Retail sales were higher than last year in August despite already strong comparatives in 2023, though growth was relatively subdued amid a "challenging" environment that's likely to last until the end of the year, according to a closely watched retail barometer released on Tuesday.

The British Retail Consortium-KPMG Retail Sales Monitor for August showed a 1% year-on-year increase in UK retail sales, against an increase of 4.1% in August 2023.

This was above the three-month average growth rate of 0.4%, but slightly below the 12-month average of +1.2%.

Food sales were 2.9% higher in the three months to August, making up for the 1.7% decline in non-food sales.

“Sales growth picked up in August, particularly for food as people came together to host barbecue and picnic gatherings for family and friends, and for summer clothing, health and beauty products as people prepared for trips away and summer social events," said the BRC's chief executive Helen Dickinson.

"While computing did well as university students made the most of summer discounting and readied themselves for the new academic year, other back to school related sales were weaker than normal as some families opted for second hand purchases.”

Dicksinson predicted that consumer spending may weaken in the coming months with energy bills set to rise in October, the same month that government's Autumn Budget is due, and called for "decisive action" to fix a "broken" business rates system which she said is holding back investment and limiting growth.

Commenting on the data, KPMG's UK head of consumer for retail and leisure, Linda Ellett, said: “Consumer sentiment is gradually starting to improve, but there still remains some nervousness around potential tax rises and the cost of putting the heating back on when the cooler weather arrives.

"The fragile nature of consumer confidence means shoppers will continue to be driven by price and value, moving from brand to brand to find the best price benefit and we are likely to see retailers using promotional activity to seek to win at this.