Retail sales registered their fourth month in a row of growth in August, the Office for National Statistics (ONS) said on Friday.
Spending in shops and online rose by 0.8% between July and August. Analysts had forecast growth of 0.7%.
Compared to a year earlier, retail sales were up 2.8% in August. Economists had expected annual growth of 3%.
The data showed a continued solid rebound in consumer spending, which began after shops were allowed to reopen in June. Retail sales surged back to pre-pandemic levels in June and sales grew far faster than economists had expected in July.
Michael Hewson, chief market analyst at CMC Markets, said the government’s Eat Out to Help Out scheme likely helped sales last month by increasing the number of people visiting city and two centers.
“Anecdotally, there were queues outside some restaurants in my local area, every Monday, Tuesday and Wednesday during August,” Hewson said ahead of the data. “It would be a surprise therefore if we didn’t get a decent number for retail sales.”
The ONS said visits to supermarkets and other food shops decreased throughout much of August, which could be to do with the meal discounting scheme.
“The Eat Out to Help Out scheme encouraged many consumers to spend more money in food outlets, which may have reduced spending in supermarkets,” the stats body said.
Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said the boom in staycations likely helped retail sales in August too.
“Even if UK residents who stayed in the country did not go on holiday, they still will have purchased food and other goods that normally they would have bought abroad,” Tombs said.
Online retail sales fell by 2.5% in August but were still up around 50% on last year. 28% of all shopping was done online.
Recent private sector data had suggested the strong retail sales momentum continued in August. The British Retail Consortium (BRC) last week said its spending tracker found sales up 4.7% in August, while data from credit card provider Barclaycard found consumer spending turning positive last month for the first time since the pandemic struck in March.
Clothing retailer Next this week upgraded its profit forecasts after better-than-expected sales and Primark said at the start of the month that spending at its stores had beaten internal projections.
The Bank of England said on Thursday that consumer spending was now back at levels last seen in January. The revival comes despite continued weakness in other parts of the economy, notably business investment.
Despite the recent data, the BRC warned last week that more job losses were likely in the UK retail sector as the majority of spending was going to online retailers at the expense of bricks-and-mortar shops.
“Government will need to act fast or September will see more shops close and more job losses realised,” BRC chief executive Helen Dickinson said last week.
The Confederation of British Industry (CBI) last month said UK retailers were cutting jobs at the fastest rate since 2009. Big names such as Marks & Spencer (MKS.L), Dixons Carphone (DC.L), Debenhams, John Lewis and Boots have all announced thousands of job cuts between them since the pandemic struck.
Rishi Khosla, the chief executive of Britain’s fastest-growing bank, OakNorth, told Yahoo Finance UK he believes High Street retail will never return to pre-pandemic levels, with COVID-19 accelerating a permanent shift towards online shopping.