Retail sales defy expectations in surge
Consumers ignored the pound’s post-referendum slump to send sales up 2.4% on this time last year, ONS figures show.
UK retail sales jumped in August as shoppers continued to spend despite strong price rises.
Sales were up 2.4% on this time last year, the 52nd consecutive month of year-on-year increases and exceeding the expected 1.1% rise, as consumers ignored the pound’s post-referendum slump and inflation, the Office for National Statistics figures show.
Sales rose 1% month-on-month, exceeding expectations for a much smaller increase of 0.2%.
1.0% increase in retail sales volume in August 2017 compared with July 2017; up 2.4% compared with August 2016 https://t.co/0koked9Jcy— ONS (@ONS) September 20, 2017
Increased spending in non-food shops such as department stores and DIY outlets was behind the dramatic improvement.
Figures for the three months to August as a whole, which smooth out monthly volatility, show a 1.2% rise in sales growth from the same measurement of 0.7% in July.
It came as prices increased across all store types, with non-food stores and non-store retailing recording their highest year-on-year price growth since March 1992, at 3.2% and 3.3% respectively.
Sterling jumped sharply on the news, gaining three-quarters of a cent against the dollar and half a cent against the euro.
ONS senior statistician Kate Davies said: “Within this month’s retail sales we are seeing strong price increases across all store types compared with a year ago, reflecting wider inflationary pressures.
“However, we are still seeing underlying growth in sales volumes, and with strong growth in non-essential purchases as consumers continued to buy more from non-food stores.”
Ben Brettell, senior economist at Hargreaves Lansdown, said: “The UK consumer continues to show remarkable resilience, with retail sales in August blowing economists’ forecasts out of the water.
“Spending has defied expectations of a slowdown since the Brexit referendum, and currently seems to be holding up despite weak wage growth and above-target inflation.
“This could bode well for economic growth. The UK economy is heavily reliant on the consumer, and economists had expected falling real incomes to eventually translate into weak retail sales.
“If this fails to materialise the economy could see a stronger second half to the year – though there are also growing concerns over the level of household debt, which is fuelling continued consumption in the absence of rising real wages.”