Official numbers released on Friday indicated that British retail sales mostly recovered in August following a soggy July washout, adding to evidence that the nation’s consumers were largely managing the pinch of rising living expenses.
After a dramatic 1.1% decline in July, sales volumes increased by 0.4% month over month, according to the Bureau for National Statistics. Reuters polled economists, who predicted an even greater 0.5% increase in August.
While overall sales were still weak, Heather Bovill, the deputy director for surveys plus indicators of economic activity at the Office of the Census for National Statistics (ONS), stated that food sales and a high month for apparel were responsible for a slight rebound.
These were partially offset by internet sales, which decreased somewhat as some consumers resumed in-store shopping after a particularly rainy July.The inflation rate in Britain, which had peaked at almost 11% in October of last year, was 6.7% last month, making it one of the highest among the major wealthy nations in the world.
However, the figures for August showed that sales volumes increased month over month for the six time thus far in 2023, demonstrating that consumer demand is resilient.GfK, a market research company, said earlier on Friday that its index of confidence among consumers was at its highest level since January of last year.
However, the effect of the Bank of England’s gradual increase in interest rates since the month of December 2021 has probably not yet been fully realized and could have a negative influence on spending by consumers later in 2023.
The BoE stopped raising borrowing costs on Thursday after citing indications of an impending downturn in the economy.
In contrast to experts’ expectations for a 1.2% decrease, the ONS reported that retail sales volume were down 1.4% from a year earlier. Since March 2022, that fall was the smallest ever.
The majority of recent updates from major British shops have been encouraging. The owner of Primark, Associated British Foods (ABF.L), increased its earnings forecast last week, while clothes retailer Next (NXT.L) did the same on Thursday.