UK Retail Sales Rise More Than Forecast As Consumers Stir

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Sales grew by 2.4% on a year-on-year basis, the ONS said, up from just 1.4% in July, and even further ahead of the 1.1% growth that had been forecast by economists polled prior to the release. "Whilst depreciation is likely to increase the cost of imports, other factors determine whether these are passed on to consumers".

"Moreover, a no-deal outcome in trade negotiations with the European Union could leave consumers facing price increases of up to 30 per cent on some products, which will do substantial damage to growth in sales volumes".

At 4:30 am ET Wednesday, the Office for National Statistics is scheduled to release United Kingdom retail sales for August. While the pound fell against the Swiss franc, it held steady against the US dollar, the yen and the euro.

"Today's retail sales figures indicate that consumers are showing an impressive resilience in the face of the ongoing real pay squeeze", said Ruth Gregory of Capital Economics.

The ONS said Wednesday that sales would need to rise 2.9% on the month in September to prevent sales in the third quarter being lower than they were in the second-a rate of growth not reached in nearly four years.

Looking at the three months to August as a whole, which smoothes out monthly volatility, sales growth rose to 1.2 percent from a three-monthly rate of 0.7 percent in July.

The ONS added the underlying pattern in the retail industry was one of growth, with retail sales increasing 1.2% in the quarter through to August, compared with the previous three months.

The BoE survey on Wednesday that showed businesses reporting slowing demand also suggested that the effect for the post-Brexit vote weaker pound appeared to be at its peak. Sales will fall unless September sees an increase of 2.9%, a figure last exceeded at the end of 2013.

Rachel Lund, head of retail insight & analytics at the British Retail Consortium, said August's bout of autumnal weather put a spring in the step of seasonal purchases of winter wardrobes and home furnishings.

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