UK Retail Sales Increase Unexpectedly In August

UK retail sales grew unexpectedly in August, thanks to warm weather and real wage growth, data from the Office for National Statistics revealed Thursday.

Retail sales volume, including auto fuel, gained 0.3 percent month-on-month in August, slower than the 0.9 percent increase seen in July, but in contrast to the expected fall of 0.2 percent. This was the second consecutive rise in sales volume.

Sales excluding auto fuel, also advanced 0.3 percent after rising 1.1 percent a month ago, while economists had forecast a 0.2 percent fall.

Retail sales were largely boosted by a 4.5 percent rise in household goods stores sales. Meanwhile, food store sales were down 0.6 percent and clothing and footwear sales slid 1.9 percent.

On a yearly basis, retail sales volume growth slowed to 3.3 percent from 3.8 percent in July. Nonetheless, the pace of increase exceeded the expected 2.3 percent.

Similarly, excluding auto fuel, retail sales climbed 3.5 percent after rising 4 percent in the previous month. Economists had forecast a 2.4 percent rise.

Andrew Wishart, an economist at Capital Economics, said some strengthening in consumer spending growth looks likely in the third quarter.

While inflation unexpectedly ticked up in August, the economist still expects it to ease to 2 percent by this time next year, paving the way for a sustained recovery in consumer spending growth.

In August, inflation rose to 2.7 percent from 2.5 percent in July.

In the three months to August, sales volume increased 2 percent from the previous three months with continued growth across all sectors, the ONS said.