Getting a clear picture of UK consumer and retail spend for August isn’t easy with contradictory views such as last week’s BDO report (looking at discretionary categories) being quite upbeat. By contrast Tuesday’s Barclays figures were somewhat less so, although the BRC/KPMG data on the same day looked stronger.
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Of course, all of these reports are based on different criteria and that’s what can skew the numbers.
Barclays, which looks at overall consumer spending on payment cards (including retail spend), said that spend rose only 0.5% year on year.
That was down from 1.4% in July and much lower than the latest CPIH inflation rate of 4.2%. Essential spend declined, but at least discretionary spending rose 2%, with clothing, furniture and health & beauty all performing well.
It said confidence in the UK economy increased too, to 28% (from 22% in July), following the base rate reduction, while confidence in the European (31%) and global economy (28%) climbed to 10-month highs.
Looking at a few details of the report, specific retail spending increased just 0.6% in August, led by health & beauty’s continued strong performance, up 15.6%. This marked 53 months of consecutive growth for the category, which has long benefitted from the ‘lipstick effect’, where consumers prioritise small, affordable luxuries even when making cutbacks.
Meanwhile, clothing stores got a 2.5% boost. This came as 41% of consumers said they treat themselves regularly, but are finding ways to do so on a budget, while three in five (61%) have bought themselves a ‘payday’ treat as a pick-me-up in the last year.
Moving on to the BRC/KPMG figures, they said UK total retail sales increased by 3.1% year on year, against growth of 1% in August 2024. This was above the 12-month average growth of 2%. Food sales increased by 4.7% and non-food sales rose by 1.8%, against a decline of 1.4% in August 2024. This was above the 12-month average growth of 1%. Clothing sales weren’t quite as good as they might have been given that many back-to-school purchases were secondhand rather than new.
In-Store non-food sales rose 1.3%, having dropped 2.8% a year ago. And non-foods online rose 2.7%.
Helen Dickinson, CEO of the British Retail Consortium, said: “Sunny weather and an interest rate cut helped August round off a solid summer of sales. Computing performed well as parents readied children for the new academic year, and gaming continued to show strong sales. Furniture also did better for the second month in a row, following several months of falling sales. New school clothing and footwear did not sell as well as expected, as some families opted for secondhand purchases.”
