Shoppers spent big on food, summer clothing and end-of-season sales last month, boosting high street retail sales to a two-year high in August.
According to the Office for National Statistics (ONS), annual retail sales volumes rose by 2.5 per cent last month, higher than expectations of a rise of 1.5 per cent, and the best performance since July 2022. Sales volumes accelerated from the 1.4 per cent increase recorded in July and rose by 1 per cent on a month-on-month basis. July’s monthly figure was also revised up to 0.7 per cent from an initial estimate of 0.5 per cent.
The ONS said consumers spent more on food, clothing, footwear and household goods last month, helped along by discounting at the close of the summer season.
Food spending rose by 1.6 per cent over the year, boosted by another drop in food price inflation in August to 1.2 per cent. Supermarkets also enjoyed their best month since July 2021, the ONS said.
“Supermarkets in particular contributed to the largest annual rise for food sales since the summer of 2021,” Grant Fitzner, chief economist at the ONS, said. “Looking at the broader picture, retail sales have also increased across the three-month and annual period, following strong growth from online retailers. However, sales overall remain slightly below their pre-pandemic level.”
Consumer spending is on course to rise over the coming 12 months as households get a further boost from lower inflation and falling interest rates. However, overall household spending has not yet recovered to pre-pandemic levels
Silvia Rindone, EY UK&I Retail Lead comments, "The latest figures from the Office for National Statistics continue to paint a complex picture for the retail landscape. Consumers, ever adaptive, are recalibrating their spending habits in response to economic pressures and uncertainty. The tightening of belts has led to a shift in consumer behaviour that isn’t quickly reversible as people grow accustomed to new ways of working and spending.
“August’s retail performance was uneven, with consumer spending diverging significantly across categories, with travel and hospitality faring better than fashion. Retail sales volumes rose by 1.0 per cent in August, with supermarkets and clothing retailers reporting a boost due to warmer weather and end-of-season sales. Food stores also reported an unseasonably strong month with a rise in sales volumes of 1.8 per cent - their highest yearly increase since July 2021.
“As we enter the ‘golden quarter’ with shopping events such Halloween and Black Friday on the horizon, retailers will be hoping for a positive end to the year, with many racing to attract consumers earlier than ever. Last year we saw retailers begin their mid-season sales in October and a ‘Black November’ could be on the cards again, signalling an eagerness by retailers to clear stock well ahead of the Christmas rush and spread out the trading period, rather than relying on the final six-week sprint to the end of the year.
“Over the next few months, it will be essential for retailers to keep a close eye on sales volumes, stock levels and competitor behaviour. Promoting too early and selling out at a discount could prove detrimental, but waiting too long to activate promotions could leave them with excess stock. It’s a fine line to walk.”
