UK Retail Sales Aug – 19/9/2025 – What to Expect
U.K. consumers step back into focus on Friday, 19 September 2025 at 07:00 BST, when the ONS publishes August Retail Sales. After July’s solid +0.6% m/m (+1.1% y/y), the street is looking for +0.4% m/m and +0.6% y/y. Our estimate base case is a touch firmer – +0.5% m/m and +0.8% y/y – reflecting supportive seasonal dynamics (back-to-school, warm weather) and steady non-food momentum, partly offset by still-cautious essentials spending. Softer goods inflation should also help translate value growth into modest volume gains.
Headline calls
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Retail Sales MoM (volumes): +0.5% (street +0.4%, prior +0.6%).
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Retail Sales YoY (volumes): +0.8% (street +0.6%, prior +1.1%).
We’re estimating a touch above consensus on both, looking for a steady but unspectacular August as warm weather, back-to-school and home-related categories offset softness in essentials and a still-cost-conscious consumer.
Why We’re Above Consensus
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High-frequency retail points to a decent August in value terms. The BRC-KPMG Retail Sales Monitor reported total sales +3.1% y/y, with food +4.7% and non-food +1.8%, and noted strength in homeware/DIY and computing ahead of the school term. That’s supportive for volumes once you adjust for prices.
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Card-spend signals were softer overall, but the mix helps goods. Barclays’ report showed consumer card spending +0.5% y/y (down from +1.4% in July), with discretionary +2.0% and essentials weaker—consistent with clothing/home/tech doing the work while food/fuel contribute less. This tempers, but doesn’t negate, the BRC signal for volumes.
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Prices: inflation steady, goods disinflating. August CPI stayed at 3.8% y/y; the goods component has cooled versus last year. That means a given pound of nominal sales buys a bit more “volume” than earlier in the year—helpful for the ONS volume print even if tills weren’t roaring.
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Category color from July baseline. July ONS volumes rose +0.6% m/m and +1.1% y/y, giving August a solid base. I expect non-food (clothing, household goods, computing) to carry August again, while food and fuel are more subdued.
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Timing & scope check. We’re previewing the ONS Aug-2025 release due Fri 19 Sep, 07:00—this is the official volumes series the market trades.
MoM mechanics (why +0.5%)
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Tailwinds: sunshine/back-to-school, BRC non-food momentum (home/DIY, computing), and a modest lift from clothing/beauty.
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Headwinds: weak essentials card-spend, food price stickiness (value ≠ volume), and only marginal help from fuel.
YoY logic (why +0.8%)
BRC value +3.1% y/y minus August goods-price inflation (lower than last year) suggests small positive volumes on a 12-month look-through, but not a surge—hence a print just under 1% y/y.
Risk skews & “watch fors”
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Upside (MoM ≥0.7%, YoY ≥1.0%): stronger online/non-food and bigger back-to-school lift in computing/clothing than card-data implies.
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Downside (MoM ≤0.2%, YoY ≤0.4%): Barclays’ soft overall spend proves the better guide, with essentials drag outweighing non-food strength.
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Ex-fuel and non-store lines: a firm non-store gain would validate the BRC/KPMG narrative around computing and back-to-school; a weak ex-fuel would argue the opposite.
Market take
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A beat (e.g., MoM ≥0.6 / YoY ≥1.0) should support GBP on the margin and nudge front-end gilts higher (yields up) if traders read it as resilience post-CPI.
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A miss would lean the other way, especially after the BoE’s cautious hold and sticky headline CPI.
Bottom line: We expect another solid-but-not-hot month +0.5% m/m, +0.8% y/y, a hair above the street as non-food and back-to-school categories do just enough to offset weak essentials and still-elevated food prices.
Conclusion
We expect another steady but not hot month for retail volumes—+0.5% m/m, +0.8% y/y, a shade above consensus. Strength in non-store and selected non-food categories should outweigh a subdued read on food and fuel. Upside risks come from a stronger back-to-school lift; downside risks stem from weak essentials/card-spend translating more fully into volumes. For markets, a beat would modestly support GBP and nudge front-end gilt yields higher, while a miss would do the opposite. Keep an eye on ex-fuel and non-store lines for the cleanest signal on underlying demand.
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