UK Retail Sales Rise as Bank Rate Holds at 3.75%

Retail sales volumes, the ONS measure of the quantity of goods bought after stripping out price rises, rose 0.5% month-on-month in August, the Office for National Statistics said today, rebounding from July’s 0.5% fall. That followed a 0.6% rise in June, revised down from an initially reported 0.7%. The three-month trend to August was up 0.9% versus the three months to May, and volumes were 2.4% higher than a year earlier, matching the annual rate on both a single-month and rolling three-month basis.

The rebound was broad-based. Non-store retailers, businesses that sell only online or by mail order, bounced back after a July dip the ONS linked to promotions being pulled forward into June, food stores and supermarkets performed well, and department stores recovered from stock-availability problems seen the previous month. Total retail sales volumes, including fuel, reached their second-highest level since April 2022, just below June’s level.

Beneath that headline strength, fuel sales fell over the three months as high pump prices changed motorist behaviour, and online spending values rose 2.5% month-on-month after July’s 4.2% fall, taking online’s share of total retail spending to 28.8% from 28.4%. That points to a consumer that is resilient overall but selective about where it spends.

The Bank of England has held Bank Rate, the interest rate it sets for the economy, at 3.75% throughout the period this bulletin covers.

The next ONS retail sales release, covering September, is due on the 23rd of October, the next test of whether this resilience holds.