British retail sales rebounded in August, driven by online purchases, even as inflation levels edged higher. Sales volumes increased by 0.5% month-on-month, reversing the 0.5% decline recorded in July. This uptick surprised economists, who had anticipated a 0.1% drop for the period.

According to the Office for National Statistics (ONS), non-store retailing, which primarily encompasses online sales, saw a resurgence in August. Department stores also reported improved trading conditions following the supply chain disruptions they encountered in July. The overall downturn in retail sales during July was partly attributable to seasonal discounting promotions held in June.

However, fuel sales experienced a decline in August, a consequence of surging oil prices driven by escalating tensions in the Middle East. The headline inflation rate climbed to 3.1% in August, up from 2.9% in the previous month.

So far this year, UK consumers have demonstrated considerable resilience in the face of war-related shocks. Sales volumes are running 2.4% higher compared to the same period in 2025, and consumer confidence has rebounded to levels not seen since before the conflict began.