UK Retail Sales Rise in August, but Tax Concerns Loom Over Festive Period

Published: 09 September 2025. The English Chronicle Desk

UK retail sales rose in August, boosted by record warm weather and a Bank of England interest rate cut, yet retailers remain cautious about the coming festive period amid concerns over potential tax rises. The latest figures from the British Retail Consortium (BRC), compiled in collaboration with KPMG, show that overall sales increased 3.1% year on year, with strong performances in food and drink as well as computing equipment.

The report noted that the 4.7% growth in spending on food and drink reflected higher prices rather than an increase in volume purchased. Price inflation has affected staples including beef, chocolate, and coffee, contributing to the rise. Sales of computers and gaming equipment were particularly strong as parents prepared children for the new school year, though spending on uniforms appeared more restrained.

Helen Dickinson, chief executive of the BRC, described August as “a solid summer of sales” but cautioned that retailers are approaching the so-called golden quarter—the critical pre-Christmas trading period—with uncertainty. “With the later-than-expected budget falling just days before Black Friday, many are uneasy about how consumer confidence and spending could be impacted by tax rise speculation in the run-up to Christmas,” Dickinson said. The Chancellor, Rachel Reeves, recently announced that the autumn budget will be delivered on 26 November, later than many had anticipated.

Furniture and home goods sales also recorded growth, continuing a trend of recovery following months of decline. Appliances, DIY products, and garden tools all experienced increased demand, with KPMG noting that new product launches, such as Samsung’s Galaxy foldable phones and Google’s Pixel 10, provided a further boost to non-food sales. Overall, non-food sales rose 1.8% year on year in August, marking the third consecutive month of growth.

Despite these gains, shopper confidence fell for the third month running in August. Many consumers expressed concerns over further food price inflation and financial pressures as energy bills rise and potential tax hikes loom. Sarah Bradbury, chief executive of the Institute of Grocery Distribution, highlighted the dual pressures facing households: “The emotional weight of rising energy bills and fears of tax hikes in the autumn budget are adding to the strain, especially as unemployment ticks upward. Yet there are glimmers of relief: interest rates have been cut again, and mortgage rates are easing, offering some financial respite. Financially resilient shoppers may remain more confident, even as they brace for a challenging winter.”

The report underscores the delicate balance for UK retailers: strong summer performance and easing interest rates offer hope, but uncertainty over fiscal policy and rising living costs could dampen consumer spending during the crucial run-up to Christmas.