Food sales suffer as consumers dine out in August, latest ONS statistics show

Commenting on the August ONS retail sales data which show a decrease of 0.9 per cent last month, Jacqui Baker, partner and head of retail at RSM, said: ‘Staycations have driven an increase in footfall throughout August as consumers enjoyed a real British summer complete with bad weather to dampen the mood slightly which has led to another fall in overall retail sales volume in August. 

‘More social events, including a spike in weddings as postponed nuptials finally took place and a ‘back to work’ boost, drove clothing sales which saw the only increase across all retail sectors of 0.7 per cent. We continue to see a rebalancing in spending as online penetration has plateaued with the proportion of online sales moving slightly from 27.1 per cent to 27.7 per cent in August - reinforcing a shift in shopping behaviour back to an online and in-store blend. However, the strength in clothing sales was more than offset by the decrease in food sales of 1.2 per cent as more consumers took the opportunity to dine out.

‘Competition for consumer spend remains and the post-Covid recovery will not be straightforward for retailers particularly as furlough support comes to an end and the reinstated burden of business rates starts to bite. Retailers will be looking forward to the new Autumn/Winter season landing and the all-important build up to the Golden Quarter.’ 

Thomas Pugh, economist at RSM UK, added: ‘At face value, the 0.9 per cent month on month fall in retail sales volumes in August does not bode well for GDP growth last month. However, there is some evidence that the 1.2 per cent month on month drop in food sales was driven by the further easing of restrictions on the hospitality sector causing people to eat out more. Indeed, restaurant bookings were about 35 per cent above their August 2019 level last month according to data from OpenTable. Other areas of consumer spending look like they have also improved with seasonally adjusted car sales rising by 24 per cent m/m. And the 1.5 per cent month on month rise in fuel sales volumes may be a sign that more people returned to the office. All this suggests that total consumer spending ramped up in August.

‘We’re expecting GDP growth of about 0.5 per cent month on month in August, that may sound like a relatively small rise by recent standards, but it would be enough to keep GDP on track to return to its pre-pandemic level before the end of the year.’