22nd Sep 2023 15:07
(Alliance News) - UK retail sales in August partially recovered from a washout in July, official data showed on Friday, but analysts remain nervous about how winter could play out.
"A little bit of summer delivered a welcome boost to retailers in August, but sales over the last three months have remained sluggish," said Danni Hewson, head of financial analysis at AJ Bell.
"Cost of living pressures may be easing slightly but consumers have endured a major hit to their living standards and with prices still elevated by months of massive increases, there are tough choices to be made."
The Office for National Statistics said retail sales volumes fell 1.4% annually in August, easing from the 3.1% fall in July, which had first been estimated as 3.2%.
The market had been expecting a 1.2% fall for August, according to FXStreet-cited consensus.
From the previous month, sales volumes rose 0.4% in August, compared to a fall of 1.1% in July. August's reading was a touch below market consensus, which had forecast a 0.5% rise.
July's fall was first reported as 1.2%.
The ONS explained that monthly sales growth came from food stores and non-food stores, after wet weather in July had reduced sales of clothing and supermarket food sales.
Non-store retailing, mostly online retailers, saw also saw lower sales, after getting a boost from the wet weather and a range of promotions in July.
Richard Hunter, head of markets at interactive investor, said the report sent "a mixed message."
Meanwhile, Sophie Lund-Yates, lead equity analyst at Hargreaves Lansdown, said it is a "positive development for retailers. But she warned "there's still some way to go before things are back on a totally fair footing."
On the back of the reading, JD Sports Fashion PLC added 1.4%, with Frasers Group PLC rising 0.6%.
However, some FTSE 100 retailers weren't able to shake off the cautious trading mood, with Next PLC down 1.0%, Associated British Foods PLC down 0.7%, and newly-returned Marks & Spencer Group PLC down 0.2%.
Looking ahead, Hewson said: "People still have a bit of cash, but there's a long winter ahead and many consumers are hyper aware of their budgetary constraints."
There was some relief for people in the UK on Thursday, however. At its September meeting, the Bank of England maintained bank rate at 5.25%, a more than 15-year high, in what was something of a surprise move.
It ends a streak of 14 successive hikes since December 2021, which have shot up the bank rate from a Covid-19-induced low of 0.10%. It is the BoE's first pause since November 2021.
Focus now is on whether the BoE hikes again, and when it might see fit to begin rate cuts.
By Sophie Rose, Alliance News reporter
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