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Retail sales increased in the UK in August but the overall environment is likely to remain “challenging” for the rest of the year, new survey data has shown.
Sales grew by 1% year on year in August – an uptick on the 0.5% growth recorded in July – according to the BRC-KPMG retail sales monitor. Growth was also ahead of the three-month average of 0.4% but shy of the 12-month average of 1.2%.
Food sales increased 2.9% year on year in the three months to August, with consumers coming together to “to host barbecue and picnic gatherings for family and friends” according to BRC chief executive Helen Dickinson.
Both sales and volumes in grocery in the first four weeks of the month saw an uptick, with the rate of sale increasing from July. This tallied with separate sales data from Barclaycard also released on Tuesday (3 September) showing grocery sales grew by 1.9% in August, the largest rise since March.
Non-food sales across retail, meanwhile, fell by 1.7% year on year in the three months to August, according to the BRC.
Summer clothing, DIY, health & beauty products and computing performed well, although back to school related sales were “weaker than normal” with some families opting for second-hand purchases, Dickinson said.
KPMG UK head of consumer, retail & leisure Linda Ellett predicted the “challenging” retail environment was “likely to dominate for the rest of this year”.
Consumer sentiment was “gradually starting to improve” but there remained “some nervousness around potential tax rises and the cost of putting the heating back on”, Ellett said.
Shoppers would “continue to be driven by price and value” and switch brands to secure the best deal, which would in turn drive promotions in the coming months, she added.
Morning update
British packaging company DS Smith has issued a trading update covering the first quarter of its financial year. The “overall trading for the current financial year” remained in line with management expectations, DS Smith said.
The company, which makes cardboard boxes used by Amazon and Unilever, was the subject of a takeover bid by Tennessee-based International Paper in April. Management at DS Smith said the combination of IP and DS Smith remained “on track”.
In June, DS Smith reported a fall in revenues and pre-tax profit in the year to the end of April. Sales were down 17%, to £6.8bn, while pre-tax profits fell by 24%, to £503m.
Shares in DS Smith rose 0.3% in early trading.
The FTSE 100 is up 0.1% this morning to 8,372.48pts
Early risers include McBride, which is up 1.9% to 132.5p and Fever-Tree, up 1.6% to 901p.
Chief among the fallers are SSP Group, down 1.1% to 167.6p, and THG, down 1% to 59.5p.
Yesterday in the City
The FTSE 100 closed yesterday down 0.1%, to 8,363.84pts.
Irish global nutrition group Glanbia ended up 2.3%, to €15.96, while Naked Wines climbed 3.7% to end the day at 53.9p.
B&M European Value Retail was among the fallers, dipping 1.7% to 437.5p. AG Barr also fell 1.7%, to 655p.
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