Retail sales for August smash expectations and boost pound

Figures show that increases in retail sales did not come from essential items, such as food - Bloomberg

Retail sales for August smashed expectations, growing well above the consensus forecast of 0.2pc, and providing a boost for the pound.

Overall retail sales climbed by 1pc between July and August, the Office for National Statistics (ONS) said, with equal rises in both volume and value of sales, meaning consumers were not further pinched by having to spend more in order to bring home less. 

The pound jumped 0.7pc against the dollar to $1.3580 after the report.

In encouraging signs for the economy, which has seen living standards squeezed by inflation and stagnant wages, petrol station sales fell and food shopping remained flat, showing that increased sales came from non-essential items.

Ruth Gregory, UK economist for Capital Economics, said the ONS figures indicated consumers were "showing an impressive resilience in the face of the ongoing real pay squeeze."

"Not only did retail sales volumes rise by a hefty 1pc on the month in August – exceeding consensus expectations of a 0.2pc rise – but growth in the previous month was revised up from 0.3pc to 0.6pc too. Admittedly, we shouldn’t get too carried away by these figures. After all, the retail sales figures are very volatile on a month-by-month basis," she added. 

Kate Davies, senior statistician at the ONS, warned that strong price increases were still hitting shoppers across all stores. “Within this month’s retail sales we are seeing strong price increases across all store types compared with a year ago, reflecting wider inflationary pressures," she said. "However, we are still seeing underlying growth in sales volumes, and with strong growth in non-essential purchases as consumers continued to buy more from non-food stores.”