Retail sales grew in August, helped by record warm weather and a Bank of England interest rate cut.
Retailers have, however, warned that speculation over potential tax rises could hit spending during the vital pre-Christmas trading season.
According to the latest British Retail Consortium (BRC) and KPMG survey, sales rose 3.1% yearly. Food and drink sales led the way, up 4.7%, although the BRC said price rises rather than higher volumes drove this. Inflation continued to push the cost of staples such as beef, chocolate and coffee.
Computing and gaming products also performed strongly, boosted by the back-to-school period. However, parents facing rising costs cut back on school uniforms and other essentials.
Non-food sales increased by 1.8%, the third monthly rise. Furniture sales grew for a second month, while household goods, DIY products and garden tools also improved. Demand was lifted further by the launch of new Samsung foldable phones and Google’s Pixel 10 in the late summer.
August followed growth of 2.5% in July, supported by warm weather and England’s Euros success, and 3.1% in June.
Despite the positive figures, shopper confidence fell for the third consecutive month, with many consumers expecting further food price rises and financial pressures. The BRC warned that businesses remain cautious about the “golden quarter”, the three months before Christmas that account for a significant share of annual revenues.
The Chancellor, Rachel Reeves, will deliver the budget on 26 November.
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