Retail sales in the UK exceeded expectations last month despite prices soaring by as much as 5% over the past year.
New figures from the Office for National Statistics (ONS) showed the volume of goods sold in August increased by 1% compared to the month before, well ahead of the 0.2% growth which was predicted.
Overall sales increased by 2.4% compared to August 2016, marking the 52nd consecutive month of annual growth.
The strong performance comes despite the fact that price inflation is creeping up towards the 3% mark in the UK, making goods and services in the UK more expensive.
The price increase was particularly evident in the fuel sector, with the cost of petrol jumping by 5% over the past 12 months and the volume sold subsequently dropping by 1.1%.
Video: Plunge in retail sales blamed on rising prices
Customers also looked to be searching for deals outside of the traditional shops and supermarkets, with non-store retailing reaping the benefits and reporting a 15.5% increase in sales volumes.
Non-store, which encompasses internet-only retailers such as Amazon and Asos as well as traditional mail order catalogues and market stalls, saw a 19% jump in the amount customers spent – well ahead that of other sectors – despite their prices also increasing across the year.
The currency markets reacted well to the figures with the pound gaining almost a cent against the dollar after their release.
It has now fallen back slightly but is still trading half a cent up.
Image: Fuel prices have seen the biggest increase over the past year, up 5 percent
“Today’s retail sales figures indicate that consumers are showing an impressive resilience in the face of the ongoing real pay squeeze,” says Ruth Gregory, UK Economist from Capital Economics.
“August’s bout of Autumnal weather put a spring in the step of seasonal purchases as shoppers invested in winter wardrobes and furnishing home interiors,” said Rachel Lund, Head of Retail Insight & Analytics at the British Retail Consortium.
“The strength of today’s figure will add to the growing expectation of an earlier interest rate rise.
“However, retail sales figures are notoriously volatile and with a number of factors making reliable seasonal adjustment nigh on impossible, the health of consumer spending should be assessed with caution.”