Retail sales rebounded last month despite shoppers facing pressure from higher inflation, according to an industry report.

The British Retail Consortium, working with consultancy KPMG, said like-for-like sales rose 1.3% in August, against a 0.9% fall for the same month in 2016.

Sales of autumn fashion ranges and back-to-school kit were big contributors to the rise, it said.

But the body warned belt-tightening by consumers was still a risk.

Household finances have been squeezed by tepid wage growth and higher inflation, leading to an expansion of credit and a decline in savings.

The cost of living held steady at 2.6% in July, as a drop in fuel prices offset the rising cost of food, clothing and household goods. Wages are growing at a slower 2.1% rate.

Despite the sales improvement, the BRC’s chief executive, Helen Dickinson, was worried about the months ahead. She said:

“These figures tell a less positive story about the health of consumer spending than it might seem at first glance.”

In food, total sales remained robust, easing back by 0.2% points to 3.2% for the three months to August, but remained above the annual average of 2.7%.

Online non-food sales continued to motor ahead in August, expanding by 11% compared to 8.8% for the same month last year.

Ms Dickinson said:

“Non-food sales have only just recovered to levels seen two years ago, after a dismal August in 2016, while strong figures for food are largely the result of rising prices, leaving growth in volume terms weaker than last year.

“Stark challenges lurk around the corner for the retail industry… with the amount of money in people’s pockets set to be dented by inflation and statutory rises in employee pension contributions in a few months’ time.”

Source: BBC

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