Key Takeaways
- UK like-for-like retail sales growth slowed to 0.5% in August, down from 1.0% in July, marking the weakest performance in four months.
- Total retail sales rose by just 0.7% year-on-year, a sharp deceleration from the 3.1% growth recorded in August 2025 and well below the 12-month average of 1.6%.
- Non-food sales fell by 0.8%, as consumers pulled back on big-ticket discretionary items like furniture and appliances due to looming increases in household bills.
- Food sales growth eased to 2.6%, down from 3.8% in July, as the temporary boost from earlier summer heatwaves and major sporting events began to dissipate.
British retail sales growth cooled significantly in August, reaching a four-month low as the momentum from a record-breaking hot summer faded. Data from the British Retail Consortium (BRC) and KPMG revealed that total sales grew by only 0.7% year-on-year, down from 1.3% in July. The slowdown suggests that the "summer surge" driven by earlier high temperatures has run its course, leaving retailers facing a challenging autumn.
The 0.5% like-for-like sales growth—which adjusts for changes in store floorspace—was notably lower than the 1.2% analysts had expected. Linda Ellett, head of consumer, retail and leisure at KPMG, noted that summer spending started early this year in May, which effectively "pulled forward" purchases that might otherwise have occurred in August. While health, beauty, and food categories remained in positive territory, they were unable to offset the broader decline in discretionary spending.
Non-food categories suffered the most, with sales dropping 0.8% in August. Consumers appear to be "tightening their belts" ahead of expected increases in energy costs and other household bills. Retailers reported that shoppers are increasingly prioritizing smaller luxuries, such as beauty products, while delaying major investments in home goods. In-store non-food sales were particularly hit, falling 1.2% compared to the previous year.
The cooling demand is also reflected in shifting consumer confidence. While separate data from Barclays (BARC) showed overall consumer card spending grew 2.1% in August, the bank reported a sharp drop in consumer confidence to 26%, down from a 21-month high of 30% in July. This divergence suggests that while consumers are still spending on essentials and small treats, they are becoming increasingly wary of the broader economic outlook.
Industry leaders are now looking toward the upcoming Autumn Budget for potential relief. BRC Chief Executive Helen Dickinson emphasized that retailers are facing a "double whammy" of rising operating costs and slowing demand. The sector is calling for government action on business rates and energy costs to support investment and help stabilize prices for consumers as the "golden quarter" of holiday shopping approaches.
The soft retail data may also influence the Bank of England's next policy assessment. Analysts suggest that the loss of momentum in consumer spending provides a "soft" data point that could take pressure off the case for holding interest rates higher for longer. However, most experts agree that a single month of disappointing retail figures is unlikely to shift near-term interest rate pricing on its own.
Ed Liston is a senior contributing editor at TheStockMarketWatch.com. An active market watcher and investor, Ed guides an independent team of experienced analysts and writes for multiple stock trader publications.