Brexit latest: Retail sales hold up in August after July surge

Retail sales fell by 0.2 per cent in August, following an upwardly revised 1.9 per cent rise in July

Shopping has held up after the Brexit vote (Getty)

Retail sales have held up in the wake of the Brexit vote, reinforcing the impression that consumers have brushed off the impact of the referendum vote.

Official data shows that retail sales volumes fell by 0.2 per cent in August, following a 1.9 per cent surge in July.

The August figure was better than the 0.4 per cent decline pencilled in by City of London analysts and the July number was revised up from the initial estimate last month of 1.4 per cent growth.

Post-Brexit shopping continues

“Despite a small fall after July's sharp increase, the underlying pattern in the retail sector remains one of solid growth. There was some variation between different sectors but overall the figures do not suggest any major fall in post-referendum consumer confidence” said Mel Richard, the Office for National Statistics' Head of Retail.

"Spending on the high street is still going gangbusters" said Paul Hollingsworth of Capital Economics, although he predicted some moderation over the next few quarters.

"After yesterday's decent jobs numbers this report provides further evidence that the UK is weathering the near term effects of the Brexit vote well" said James Knightley of ING.

Retail sales account for around 30 per cent of household consumer spending and household spending accounts for around 60 per cent of GDP making retail an important barometer of the direction of the wider economy.

City economists have been revising away their forecasts of a post-Brexit vote recession in the second half of the year on the back of stronger than expected hard data and surveys.

The annual rate of growth of retail sales volumes last month was 6.2 per cent and 5.9 per cent excluding fuel.

Retail sales expanded by 1.6 per cent in the second quarter of the year and the latest three month on three month growth rate is equal to that.

The ONS reported that all stores except textile, clothing and household goods saw an increase in volumes sold.

There were some tentative signs of the 10 per cent depreciation of sterling against the dollar in the wake of the 23 June feeding through into shop prices.

The sector's inflation index fell by 1.9 per cent in August, a lower rate of deflation than the 2.5 per cent contraction in June and the 3.5 per cent fall seen as recently as last September.

"With inflation set to rise quickly over the next few months, the retail environment looks likely to become less favourable" said Martin Beck of the EY ITEM Club.

Prices on the up?