August saw UK retail sales soar to their highest in two years, driven by summer bargains.
- Annual sales volumes surged by 2.5%, exceeding expectations of a 1.5% rise.
- Consumer confidence is bolstered as inflation falls and interest rates remain stable.
- Supermarkets experienced their strongest month since July 2021, led by food sales.
- Retailers are optimistic for increased spending on autumn and winter goods.
UK retail sales in August 2024 climbed to a two-year high, with annual volumes increasing by 2.5%, surpassing the anticipated 1.5% growth, according to the Office for National Statistics. This marks the most significant improvement since July 2022 and a notable acceleration from July’s 1.4% growth. On a month-to-month basis, sales rose by 1%, with July’s growth revised upwards to 0.7%.
The surge in sales was largely attributed to increased spending on food, clothing, footwear, and household items, spurred by end-of-season sales. Supermarkets, in particular, posted impressive figures, contributing to the largest annual growth in food sales since the summer of 2021. Grant Fitzner, the ONS chief economist, noted the robust performance in supermarkets, saying, “Supermarkets saw their best month since July 2021, with food sales rising as inflation continues to ease.”
Food spending alone rose by 1.6% compared to the previous year, with a decline in food price inflation to 1.2% further encouraging consumer confidence. The easing of inflation and stable interest rates are expected to support household budgets, fostering a positive outlook for retailers.
Meanwhile, the Bank of England held its base interest rate steady at 5%, with expectations to reduce it before year’s end. Although overall household spending remains below pre-pandemic levels, there is optimism for the retail sector. Erin Brookes of Alvarez & Marsal expressed confidence in a potential rise in spending on autumn and winter apparel as the weather cools.
The UK retail sector is poised for continued growth as economic conditions improve, enhancing consumer spending and confidence.
