UK retail sales growth slowed to 0.7% year on year in August as earlier summer spending faded and most non-food categories struggled to maintain momentum.
The latest BRC-KPMG Retail Sales Monitor shows growth weakening from July and falling below the 12-month average of 1.6%. Food sales increased 2.6%, while non-food sales declined 0.8%.
The figures add a second perspective to recent CBI evidence showing a sharp decline in reported retail sales volumes during August. The two measures use different methodologies, but both point towards softer demand after stronger spending earlier in the summer.
Linda Ellett, KPMG UK’s head of consumer, retail and leisure, said: “Despite temperatures remaining high, summer season cooled off for retail sales in August.”
Unusually warm weather began relatively early this year, bringing forward demand for summer clothing, garden products, leisure items, and other seasonal categories that might otherwise have supported later months. By August, some of that spending had already occurred.
Food, drink, health, and beauty continued to benefit from holiday and warm-weather demand, but the wider non-food market was much flatter. Retailers are now shifting attention towards back-to-school trading, autumn ranges, Black Friday, and the Christmas period.
The distinction between nominal sales growth and volumes remains important. A retailer can report higher cash sales because prices have increased even when the number of items sold is flat or falling. Persistent cost inflation therefore makes headline revenue figures less useful on their own when assessing underlying consumer demand.
Households continue to face pressure from housing costs, energy, food, transport, and other essential spending. Even where wage growth supports nominal incomes, consumers can respond to uncertainty by delaying larger discretionary purchases or trading down between brands and retailers.
That environment creates a difficult planning problem for businesses entering the most important trading quarter of the year. Retailers need enough stock to meet Christmas demand without becoming overexposed if spending disappoints, especially in seasonal categories where unsold inventory may require heavy discounting.
Promotional decisions are likely to become more important as Black Friday approaches. Discounts can stimulate demand and clear inventory, but widespread promotion compresses gross margins and can train customers to postpone purchases until offers appear.
Retailers with strong data and loyalty programmes have more scope to target incentives selectively rather than applying broad price reductions. Digital channels also allow companies to adjust merchandising and offers more rapidly as demand patterns become clearer.
The August result sits alongside continuing cost pressure across the sector. Labour is a major expense for store-based businesses, while energy, property, logistics, technology, regulation, and supply chain costs remain material. Weak volume growth therefore leaves less room to absorb increases without affecting margins or prices.
Businesses are also preparing for a labour market in which recruitment and workforce investment remain politically prominent. The government’s new partnership with major retailers to expand opportunities for young people could broaden entry-level recruitment pipelines, but staffing economics still depend on overall store productivity and demand.
The final quarter will determine whether August represented a temporary pause after an early summer or a more persistent weakening in household spending. Back-to-school demand provides the first test, followed by Black Friday and Christmas.
The BRC-KPMG measure shows that retail continued to grow in cash terms during August, but at a pace too modest to provide broad relief after a year of persistent operating-cost pressure.
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