Retailers buoyed by return to growth in summer sales but consumer spending worries persist

Helen Cahill
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Retailers benefited from a summer boost last month as both food and non-food retailers bagged a rise in sales.

In August, retail sales grew by 1.3 per cent on a like-for-like basis, according to data from the British Retail Consortium (BRC) and KPMG.

The figures were a turnaround from the 0.9 per cent fall in sales registered in the same month last year.

Over the three months to August, like-for-like food sales grew 1.8 per cent and non-food sales edged up 0.6 per cent.

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However, the BRC warned that rising inflation, combined with an upcoming rise in employee pension contributions, would squeeze consumer spending in the coming months.

BRC chief executive Helen Dickinson said: "These figures tell a less positive story about the health of consumer spending than it might seem at first glance.

"Non-food sales have only just recovered to the levels seen two years ago, after a dismal August in 2016, while strong figures for food are largely the result of rising prices, leaving growth in volume terms weaker than last year."

Don Williams, retail partner at KPMG, said the sales uptick for furniture and fashion retailers was a "welcome relief", given the sluggish performance of the sector this year.

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“Retailers taught us a thing or two about Back to School, with children’s clothes and footwear obtaining top-marks in terms of sales," Williams said.

"Elsewhere, growth in home improvement sales – including furniture – point to the influence of staycations, although it could also be that home furnishing retailers are not having to compete with the likes of the Olympics for attention this year."

Figures from Barclaycard released today found consumer spending growth slowed to 2.9 per cent in August. Growth in spending on entertainment fell to 9.4 per cent from 12.5 per cent in July.

However, fashion retailers benefited from a year-on-year growth of three per cent, up from an uptick of just 0.3 per cent in the prior month.