UK retail sales increased by 0.7% compared to the same period last year in August, according to a report by the British Retail Consortium (BRC) and KPMG. This growth rate was lower than the 3.1% recorded in August 2023 and also below the 12-month average of 1.6%. The report highlighted that food sales rose by 2.6% year on year, but this was still below the 4.7% growth seen in the previous August and under the 12-month average of 3.2%. In contrast, non-food sales fell by 0.8% compared to the same month last year, lagging behind the 1.8% growth in August 2023 and the 12-month average of 0.2%. BRC lead economist Harvir Dhillon described August as a disappointing month for retail sales, with overall performance falling short of the average for the past year. He noted that rising household bills, which are expected to increase further, have led many shoppers to be more cautious with their spending. Discretionary purchases—such as furniture and household appliances—have declined, while consumers have shifted toward smaller indulgences, particularly in the health and beauty sectors. Separate data from Barclays showed that consumer card spending increased by 2.1% year on year in August, up from a 2% growth in July. According to a Barclays survey, consumer confidence in their household finances reached a six-month high at 66% in August, up from 64% in July. Consumers also felt more confident in their ability to live within their means, with 71% expressing this belief, compared to 69% in July. However, 84% of respondents remained concerned about rising prices. Jack Meaning, chief UK economist at Barclays, noted that consumer spending and confidence remained resilient in August, despite growing inflationary pressures linked to events in the Middle East. He suggested that consumers should be able to manage through a period of temporary, narrow inflation. However, he added that risks remain, and if the situation in the Middle East continues or worsens in the coming months, households could face even greater pressure to be more selective with their spending.