Retail Sales Defy Forecasts With 0.5% August Rise
Shoppers confounded the gloom: sales volumes rose 0.5% in August against forecasts of a fall, up 2.4% on the year, with the three-month level the second-highest since April 2022. The ONS credited warm weather, a late bank holiday and the World Cup — drink retailers thriving on “promotions, the hot weather and the World Cup” — while noting the war’s fingerprints: fuel volumes fell as motorists, facing record prices, only partly filled their tanks.
The British consumer keeps refusing to read the script: with petrol at war records, mortgage rates climbing and inflation heading past 4%, spending should be flinching — instead it grew, and the partial-tank detail shows how households are absorbing the shock: rationing the war-priced good while protecting everything else. For the Bank this is precisely the “resilience” that keeps its hawks dissenting — demand this sturdy gives second-round inflation effects somewhere to live. For the Chancellor it is a Budget gift: consumption holding up alongside the surprise July GDP rise lets him claim an economy “turning the corner” with a straight face. The question is duration — savings buffers, not incomes, are doing quiet work. Watch the September figures land just before the Budget: they will be its mood music.