British retail sales in August grew more than expected, but consumers still face pressure on discretionary spending.

Data released on Friday showed that seasonally adjusted retail sales in the UK increased by 1% month-on-month in August, higher than the 0.4% expected by economists. In addition, the July seasonally adjusted retail sales rate was revised upward from 0.5% to 0.7%. The UK Office for National Statistics said that sales at some supermarkets and clothing retailers increased due to warmer weather and end-of-season sales. Inflation soared in the UK in 2022, impacting consumer purchasing power for much of the following two years. Subsequently, slower price growth, faster wage increases, and interest rate cuts by the Bank of England helped to restore some lost living standards. However, recent reports from UK retailers show that discretionary spending is still under pressure. UK fashion retailer Primark reported a decline in its basic sales in the UK last quarter. Earlier this week, UK retail giant Kingfisher stated that demand for kitchens and bathrooms was sluggish. Meanwhile, UK clothing brand Next reported on Thursday that sales for the first six weeks of the second half of the year exceeded expectations, thanks to improved weather conditions. But the company also added that the market for "high-priced" home products remains challenging. Comments from Prime Minister Starmers' new government about the grim economic outlook and the possibility of tax hikes seem to have caused consumer panic. A survey released earlier on Friday showed that consumer confidence in September plummeted to a six-month low.