FX.co ★ UK Retail Sales Growth Above Forecasts in August

In August 2025, UK retail sales saw a year-on-year increase of 2.9% on a like-for-like basis, an improvement from the 1.8% rise in July and surpassing market expectations of a 2% growth. This growth represents the strongest increase in four months, driven by warmer weather boosting the demand for food, furniture, and back-to-school items. However, it's important to note that much of this increase is attributed to higher food prices rather than a rise in the volume of goods sold. Food sales experienced a significant surge of 4.7%, outpacing the 1.8% growth witnessed in non-food categories, which underscores the ongoing influence of inflation on consumer spending habits. Online sales showed a modest rise, indicating that consumers are still exercising caution in their discretionary spending. The British Retail Consortium (BRC) commented that while August's performance offers some optimism, retailers remain cautious due to dampened consumer confidence as they approach the crucial Christmas trading season. The retail sector continues to grapple with challenges such as high borrowing costs, increased energy expenses, and uncertainties surrounding the government's upcoming budget announcement in November.