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Data on Tuesday showed British consumer spending rebounded in August, boosted by holiday shopping for things like health and beauty products, but growth remained below the pace of inflation.
Retail sales rose at an annual rate of 4.1 percent in August, up from 1.5 percent in July and above the three-month average of 3.6 percent, according to industry body the British Retail Confederation compiled by consultancy services firm KPMG.
The figures are not adjusted for inflation, and the BRC data showed that the rate of growth in July was lower than the latest official consumer price growth rate of 6.8%, pointing to a drop in sales. This has been the pattern since the second half of 2021.
Inflation-adjusted data from the Office for National Statistics showed retail sales fell 1.2% month-on-month in July, largely due to wet weather.
Paul Martin, head of UK retail at KPMG, said the “bounce back” in August would be “a relief to many retailers”. Health, beauty and food and drink were the strongest performing categories “as consumers make the most of the short spell of sunshine to enjoy summer vacation,” he said.
BRC chief executive Helen Dickinson said the August results were helped by improved consumer sentiment, adding that retailers hoped “this general upward trend will continue”.
However, she said some parts of the industry were yet to pick up, with growth in apparel and footwear sluggish “as households hold back spending on children’s school uniforms and other back-to-school supplies until the last minute”.
The more positive BRC figures contrasted with consumer spending data tracked by payments firm Barclays, which monitors nearly half of all credit and debit card transactions in the UK.
Spending rose at an annual rate of 2.8% in August, down from 4% in the previous month, according to data released Tuesday. Barclays reported that the contraction in restaurant spending accelerated in August, falling to -5.8% from -2.5% in July.
Fuel spending was down sharply year-over-year, reflecting a sharp drop in forecourt prices over the past 12 months, while clothing spending was down slightly.
In contrast, holiday spending grew strongly, with airlines reporting a 32.1% annual increase. Spending at pharmacies, health and beauty stores held steady at 5.2%, Barclays said, “likely driven by holidaymakers buying sunscreen and other toiletries for their trips”.
Consumer spending on services such as restaurants, cinemas and travel is included in the Barclays data but not in the BRC retail sales data.
Spending on entertainment rose 12%, driven by a 101% surge in movie spending as audiences flocked to the big screen to watch this summer’s blockbusters, according to Barclays data.
“A huge box office success Barbie and oppenheimer That means another strong month for the entertainment sector, while holidays abroad boost international tourism and pharmacies, health and beauty stores,” said Esme Harwood, director at Barclays.
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