Retail spending surges to two-year high in August

An influx of tourists and more people choosing to holiday at home has injected a boost to the economy

Traders are gearing up for festive shopping after a strong summer (AFP/Getty Images)

Spending in shops across the UK increased last month at the fastest pace in nearly two years, a survey showed on Friday, as a weaker pound led to more Britons opting to holiday at home and to an influx of tourists from abroad.

The UK economy has cooled as the rise in inflation since last year’s Brexit vote and tepid wage growth have squeezed consumers’ real earnings.

Recent surveys have shown a gradual decline in consumer confidence and discretionary spending.

However, accountancy firm BDO said overall UK like-for-like sales values rose 2 per cent in August after falling 0.6 per cent in July.

It was the biggest rise since September 2015 and the strongest performance for the month of August in the last four years.

The BDO report chimed with other surveys that have shown increased shop spending, reflecting the rise in prices since the Brexit vote rather than an improvement in Britain’s consumer economy.

BDO highlighted a strong performance for lifestyle goods, where sales rose 3.1 per cent year-on-year due to increasing numbers of “stay-at-home holidaymakers” and foreign tourists.

Fashion sales increased by 1.5 per cent, the strongest result since November 2016, while homeware sales were up 1.9 per cent.

“As school terms begin after the summer break and the start of festive trading nears, retailers will be gearing up for their most critical trading months,” said Sophie Michael, head of retail and wholesale at BDO.

“The uncertain environment and fragile consumer sentiment requires all retailers to be ever more strategic with their pricing and promotional activities.”

A survey by the British Retail Consortium on Tuesday showed retail sales values grew by an annual 1.3 per cent on a like-for-like basis, but warned growth in volume terms was weaker than last year.

Reuters