Retail sales in the UK rose by 2.5% year on year in July, boosted by warmer weather and major sporting events such as England’s Euros football success and the British & Irish Lions rugby tour.
Clothing, homeware and food sales saw notable increases, helping to reverse previous declines. Barclaycard data showed discretionary spending climbed 2.4%, while essential spending dropped slightly.
Despite this, consumer confidence in personal finances remained steady, though optimism about the wider economy fell to its lowest since January.
The British Retail Consortium warned that rising costs, including a £7 billion increase in employer expenses from higher national minimum wages, continue to pressure retailers.
Chief executive Helen Dickinson said the sales growth “barely touches the sides” of these rising costs and cautioned that further tax hikes in the autumn budget could lead to shop closures, job losses and higher prices.
Meanwhile, many consumers are using artificial intelligence tools to manage their finances amid ongoing economic uncertainty.
Shore Capital's Clive Black said: "Food remains the prime source of sales momentum, inflation-fuelled, but non-food store sales were sound, online participation weak.
"We continue to keep a close eye on the UK labour and housing markets as drivers for retail activity, one way or another, the hot August weather and base rate cut may be sources of support."