UK retail sales saw a modest upturn in August 2025, with value rising by 3% year-on-year and volumes up by 1.2%, according to the British Retail Consortium (BRC).

The result comes as the latest Office for National Statistics (ONS) Retail Sales Index also showed monthly retail volumes increase following steady gains in recent months.

Retail sales growth driven by clothing, home and sunny weather

Much of the growth in August was driven by clothing, books, and homewares.

The BRC noted boosted spending on furniture, which had been in decline for several months, while clothing and book sales benefited from prolonged sunshine, a late summer bank holiday, and an interest rate cut.

Consumer behaviour appeared to respond to both seasonal cues (such as back-to-school shopping) and favourable weather, which encouraged visits to stores. Non-food sectors, including department stores and clothing shops, saw gains.

Economic headwinds still casting shadow over retailer confidence

Despite the positive figures, the broader outlook remains cautious.

The ONS data revealed that over the three months leading to August, retail sales volumes fell by about 0.1% compared with the previous quarter.

Experts point out that this growth, while helpful, will not be enough to counteract rising costs across the retail sector – including energy, wages and supply-chain pressures – that have accumulated since the previous year’s budget.

What retailers are calling for to sustain momentum

Dr Kris Hamer, Director of Insight at the British Retail Consortium, acknowledged the brighter summer performance, while warning that “business confidence remains weak.”

He noted that in recent surveys 56% of chief financial officers described their expectations for trading conditions over the next 12 months as “pessimistic.”

To bolster confidence, he urged meaningful reform of business rates so “no shop pays more,” and suggested that reducing regulatory and tax burdens could allow retailers to invest in jobs, stores and cushion customers from rising costs.

Government policy impact and seasonal risks ahead

The upcoming Autumn Budget, scheduled for November, is being watched closely by retailers.

Concerns centre on possible further tax rises and how these will affect both discretionary spending and consumer sentiment in the lead-up to the critical Christmas trading period.

With costs continuing to squeeze margins, many businesses see meaningful business rates reform as among the clearest levers government can use to help stabilise the sector.