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Retail sales across Great Britain unexpectedly rose last month, the latest economic indicator to defy gloomy forecasts as the chancellor, John Healey, prepares to present next month’s budget.
The Office for National Statistics (ONS) said the volume of goods sold rose 0.5% month on month in August, defying analyst expectations of a 0.2% fall.
It marks a significant bounce back in consumer spending after a 0.5% month-on-month fall in July.
The summer heatwaves fuelled increased sales of items including fans, air-conditioning units, sports merchandise and clothing in the three months to August.
The unexpected sales boost is the latest positive update on the state of the economy for the government, after a surprise 0.4% increase in gross domestic product in July that was reported by the ONS last week.
“August’s warm weather delayed the usual shift towards autumn purchases, but retailers successfully kept consumers spending,” said Sandra Prince, the head of corporate consumer at Lloyds. “The late bank holiday weekend and back-to-school shopping are also likely to have supported demand, with online sales among the areas seeing the biggest boost.”
Across the three-month summer period sales rose 2.4% year on year, again significantly above forecasts of a 1.9% rise.
Among the strongest performers were department stores, which recorded a sales rise of 1.8% month on month in August – a bounce back after a fall in July, which the ONS attributed to stock availability problems.
Non-store retailing, primarily online shopping, rose by 1.7% month on month, a major bounce back after sales fell 3.7% the previous month due to heavy promotional activity driving June sales.
Overall, non-store retailers enjoyed a strong summer with a 5.4% sales rise across the three-month period.
Retailers selling alcohol and beverages performed well across all three months to August 2026, the ONS reported, which they attributed to promotions, the hot weather and the men’s football World Cup.
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Fuel sales dropped again, down by 1.3% in August and 2.5% across the three-month period as motorists cut back on non-essential journeys after big increases in the price of petrol and diesel since the start of the Iran war in February.
UK petrol prices have hit the highest level in four years as the conflict in the Middle East intensifies.
On Thursday the Bank of England monetary policy committee voted to hold the base rate at 3.75%. However, it indicated that the latest rise in energy prices because of the conflict was likely to result in a rates increase to keep inflation in check. Inflation rose to 3.1% in August, from 2.9% in July.
“There are some challenging headwinds for consumers to navigate as we head into autumn,” said Andy Carlisle, the consumer goods and retail lead at Accenture.
“Higher energy bills, food, fuel and transport prices continue to weigh on purse strings. We’re beginning to see consumers preparing for these pressures, prioritising everyday needs while showing greater caution around discretionary and bigger-ticket purchases.”
