Retail sales staged a partial recovery in August after the previous month's wash-out but it remains a fact that consumers are spending more to take home less.
Improved weather combined with the August bank holiday led to a 0.4% increase in sales, led by a 2.3% uptick in the clothing category and a 1.2% rise in food sales. The rebound was not quite as strong as most analysts had anticipated, but was an improvement on the 1.1% decline in July.
This has triggered a good deal of conjecture on the financial fitness of UK consumers battered by nearly two years of surging prices for essentials such as energy and food, which until only recently was driving a fall in real incomes as inflation outstripped any increase in take-home pay.
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Official figures released last week by the Office for National Statistics (ONS) showed that average UK wages rose by 7.8% during the three months to July, the highest since comparable records began in 2001. With inflation in July sitting at 6.6%, it marked the first time in more than 18 months that basic wage growth outstripped the pace of inflation.
So one line of argument goes that there are reasons to be hopeful about the outlook for consumer spending. But while public confidence has improved somewhat in recent months, it remains firmly in negative territory with many wary of what's yet to come.
Many of those who have seen a return to real wage growth will opt to save their money rather than spend it. And for a large proportion of households any increase in income will just be eaten up by higher mortgage and rental costs.
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Analysts at Pantheon Macro estimate that mortgage refinancing will knock about 0.2 percentage points off the growth in households' disposable incomes in the third and fourth quarter of this year - an "unhelpful headwind, but not a decisive one". On balance, they say real household incomes should be about 2% higher in the fourth quarter when compared to the same period last year.
The outlook for UK retailing is soft at best in what has become a prolonged period of challenges for the sector.
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