Retail sales soar at fastest pace in nearly seven years

Retail sales in the UK surged at their fastest pace in nearly seven years this month highlighting that the wave of consumer spending unleashed since the initial Covid unlocking still has legs, according to fresh figures released today.

New data from the Confederation of British Industry shows retail sales swung to their highest growth rate in August since December 2014, rising to +60 per cent from 23 per cent in July.

Alpesh Paleja, lead economist at the CBI, said: “A ramping-up in retail sales growth in the year to August shows just how much consumer demand continues to spur economic recovery.”

The data indicates that the change in consumption patterns engineered during the Covid crisis toward buying goods instead of services that were largely unavailable due to restrictions on eocnomic activity is still driving the bulk of reail sales.

However, Paleja said consumer behaviour will normalise back to pre-pandemic patterns later in the year.

As a result, growth in the retail sector will likely steer towards rates registered before the onset of Covid.

Retailers upped prices at the quickest pace since November 2017, the CBI said. Large swathes of the UK economy have been struggling with severe supply chain bottlenecks causing shortages of essential inputs and, as a result, higher prices for key materials.

Higher costs have prompted businesses to increase prices for goods to protect margins, fuelling inflationary pressures in the economy. Firms are also struggling to scale production amid a scarcity of workers.

“There are signs of operational challenges still biting, with stock levels reaching another record low and import penetration falling. Disruption is being exacerbated by continued labour shortages, with many retailers reliant on younger employees currently awaiting their jab.,” Paleja added.

Stock levels reached their lowest level on record, largely driven by supply chain bottlenecks stopping retailers from importing goods.