DATA: Retail sales hold up in August but challenges persist

Retail sales picked up in August, despite persistent pressure from higher inflation, but stark challenges lay ahead, a new report shows.

UK retail sales increased 1.3% on a like-for-like basis from August 2016, when they had decreased 0.9% from the preceding year, according to the latest Retail Sales Monitor from the British Retail Consortium and KPMG.

On a total basis, sales rose 2.4% in August, against a decline of 0.3% in August 2016, which had been the poorest performance of the year.

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This is the strongest growth since Easter, above the three-month and 12-month averages of 1.9% and 1.6% respectively.

Over the three months to August 2017, in-store sales declined 1.4% on a total basis and 1.9% on a like-for-like basis.

Meanwhile, non-food retail sales in the UK increased 0.6% on a like-for-like basis in the same period, and 0.9% on a total basis, above the 12-month total average growth of 0.6%.

Online sales of non-food products grew 11% in August, above both the three-month and 12-month averages of 9.8% and 8.8% respectively.

KPMG retail partner Don Williams said that retailers have managed to achieve stronger than expected growth, despite “ongoing challenges for the industry”, but issued a word of caution.

“Adding to this [growth] could be the fact that consumers appear to be turning a blind eye to the potential crush on spending power to come. The industry now needs to overcome further devaluation of the pound and the increased costs therein.”

BRC chief executive Helen Dickinson warned that “stark challenges” lurk around the corner for the retail industry.

“Purchasing decisions are very much dictated by a shrinking pool of discretionary consumer spend, with the amount of money in people’s pockets set to be dented by inflation and statutory rises in employee pension contributions in a few months’ time,” she explained.

“It’s therefore crucial to protect consumers wherever possible from further cost pressures. For Government, this includes ensuring continued choice and availability of affordable, quality products for shoppers post-Brexit, by securing a strong deal on customs and tariff-free trade with the EU.”

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