UK retail sales grew 0.7% in August, with at least half of the growth driven by food inflation, while non-food sales fell 0.8% year on year, according to the BRC-KPMG Retail Sales Monitor.
Shore Capital, the broker, said summer fatigue and warm weather earlier in the year contributed to the slowdown, alongside many shoppers going abroad for their summer holidays rather than staying in the UK.
The broker said during late spring and early summer, Britain experienced warm weather, while the World Cup and sunshine encouraged consumers to bring forward spending on barbecues, food and drinks.
This bought-forward spending left a modest “hangover” in August, contributing to weaker retail sales as shoppers had less need for further discretionary spending.
Non-food weakness was concentrated in discretionary, big-ticket items such as furniture and household appliances, with the retail sales monitor noting that shoppers instead opted for smaller luxuries in health and beauty.
Shore Capital said food sales had remained comparatively resilient, though volumes were light in late July and August as post-World Cup fatigue and holidays took hold.
The broker reduced its forecast for food price inflation in the third quarter to a range of 3% to 5%, down from an earlier estimate of 5% to 7%, citing intense competition and increased promotional activity among grocers.
Shore Capital said GfK consumer confidence had improved in July and August, but cautioned that crude oil prices, wider geopolitical uncertainty and concerns in the gilt market remained headwinds for the consumer economy.
The broker said the government's Budget on 28 October would be an important factor in shaping consumer sentiment heading into the peak Christmas trading period.
