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UK consumer spending rebounded in August helped by holiday purchases, such as health and beauty products, but growth remained below the pace of inflation, according to data published on Tuesday.
Retail sales rose at an annual rate of 4.1 per cent in August, up from 1.5 per cent in July and above the three-month average of 3.6 per cent, according to figures from the British Retail Consortium, an industry body, compiled by advisory services firm KPMG.
The figures are not adjusted for inflation and the BRC data showed growth rates lower than the latest official rate of increase in consumer prices at 6.8 per cent for July, indicating that sales fell in volume terms. This has been the pattern since the second half of 2021.
Inflation-adjusted figures from the Office for National Statistics showed that retail sales fell 1.2 per cent month-on-month in July largely because of the wet weather.
Paul Martin, UK head of retail at KPMG, said the August “bounceback” would come as a “relief for many retailers”. He said health, beauty and food and drink were the strongest performing categories, “as consumers made the most of brief spells of sunshine to enjoy the summer holidays”.
Helen Dickinson, the BRC’s chief executive, said the performance in August was helped by improved consumer confidence, adding that retailers would be hoping “this general upwards trend will carry on”.
However, she said some parts of the sector had not seen an upturn, with clothing and footwear showing weaker growth “as families held back spending on children’s uniforms and other back-to-school goods until the last minute”.
The more positive BRC figures stood in contrast to consumer spending data tracked by the payments company Barclays, which monitors nearly half of all UK credit and debit card transactions.
Spending grew by an annual rate of 2.8 per cent in August, down from 4 per cent the previous month, according to the figures released on Tuesday. Barclays reported that the contraction in spending in restaurants accelerated in August to minus 5.8 per cent from minus 2.5 per cent in July.
Spending on fuel fell sharply year-on-year, reflecting the big decline in forecourt prices over the past 12 months, while clothing was marginally lower.
In contrast, holiday spending rose strongly, with airlines reporting annual growth of 32.1 per cent. Spending at pharmacy, health and beauty stores held up at 5.2 per cent, “likely boosted by holidaymakers buying sun cream and other toiletries for trips away”, according to Barclays.
Consumer spending on services such as restaurants, cinemas and travel is included in the Barclays data but not in the BRC retail figures.
Spending was up 12 per cent in entertainment, Barclays data showed, largely driven by a 101 per cent surge in cinema spending as audiences flocked to watch this summer’s blockbusters on the big screen.
“The huge box office success of Barbie and Oppenheimer meant entertainment enjoyed another strong month, while holidays abroad boosted international travel and pharmacy, health and beauty stores,” said Esme Harwood, director at Barclays.
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