Retail sales volumes rebounded from July’s slump to increase by 0.5% in August, according to the latest figures from the Office of National Statistics (ONS).
The ONS data also shows that, over the three months leading up to August 2026, retail sales volumes rose 0.9% compared to the previous three months.
Strong retail sales in June compensated for the slump in July to lead to an overall increase over the three months. Non-store retailers’ sales volumes grew particularly strongly in June as consumers bought fans and air conditioning units to cope with the first of the summer’s heatwaves. Sales volumes were up for clothing retailers in June.
Supermarkets performed well in July and August, and alcohol and beverage retailers performed well across all three months, thanks to the hot weather and calendar of major sporting events.
Online’s share of retail performed strongly, rising to 28.8% in August from 28.4% in July.
Total sales volumes (including automotive fuel) rose by 0.5% over the month to August 2026, and were at their second highest level since April 2022, the ONS reports.
Consumer confidence improves
Commenting on the results, Erin Brookes, European retail and consumer lead at Alvarez & Marsal said that the figures suggest that improving consumer confidence may be translating into spending. She added that the figures could reflect a ‘Burnham Bounce’ but that the Autumn Budget is likely to impact on consumer sentiment.
“With the start of the Golden Quarter approaching, retailers will be looking for a Budget that gives consumers the confidence to keep spending without adding further pressure to already stretched operating costs,” she said. “The challenge for retail leaders will be converting improved sentiment into sustained, profitable demand through the crucial final months of the year.”
Jacyn Heavens, CEO of Epos Now, described the results as “a welcome signal” as the Golden Quarter approaches. “We’re already seeing early signs of shoppers returning to discretionary spending on gifts, hospitality, and many other industries across our merchant base, which is great to see after a stop-start summer on the high street,” she said.
But Hai-Ly Nguyen, associate partner at McKinsey & Company, warned that the August’s rise looks more like a partial recovery than a full rebound. “Non-store retailers and non-food retailers saw pick up after July’s fall, with department stores and clothing recovering from stock and promotion timing effects,” she said. “The uneven summer sales rebound fits a cautious consumer. McKinsey’s UK research* shows 52% of UK consumers cite inflation as a top concern, and only 23% are optimistic about the economy. With CPI at 3.1% in August, up from 2.9% in July, shoppers are spending selectively, not uniformly.”
No room for complacency
Peter Beckman, CEO of working capital provider Treyd, said, while consumers have got used to organising their household finances around higher oil prices, retail businesses still need to assess the viability of their business models.
“The best-performing companies have prioritised margins over chasing sales, and managed cashflow carefully,” he said. “Meanwhile, some have made strategic decisions like moving out of wholesale to focus on building direct relationships with consumers and nurturing customer communities.
He added: “The final third of the year will, as ever, prove the decisive period for retailers. Many will be smartly managing their inventory to ensure they’re in the best position to serve anxious consumers who may begin Christmas shopping early and target Black Friday bargains to manage their household budgets.”
While the results are encouraging, the experts’ view is that the rebound remains fragile, and the Autumn Budget next month has the potential to make or break the success of the Golden Quarter. With discussion continuing around business rates reform and the possibility of new taxes targeting large distribution networks, retailers will be hoping for some relief from the rising cost of doing business. All eyes will be on the Treasury in the weeks ahead.
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