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UK retail sales tick up as food prices drive faster inflation

[LONDON] Shoppers are spending more, but retailers shouldn't get too excited just yet.

Retail sales climbed in August at the fastest rate since Easter, with the like-for-like gain increasing to 1.3 per cent from a year earlier, the British Retail Consortium and KPMG said Tuesday.

While that's the third consecutive month of rising sales, growth has been mainly driven by higher food prices rather than because shoppers are buying more goods, according to the BRC. Purchases of non-food items picked up in the three months to August after a spell of weakness.

"These figures tell a less positive story about the health of consumer spending than it might seem at first glance," said Helen Dickinson, chief executive of the BRC.

Market voices on:

"Non-food sales have only just recovered to the levels seen two years ago."

Separate data from Barclaycard showed annual consumer-spending growth slowed last month to 2.9 per cent as shoppers tightened their belts. 

Spending on essentials increased at its weakest pace in 12 months and almost half of those surveyed said they are "feeling the squeeze" from faster inflation. Forty-three per cent reported that they are changing their everyday spending habits in response to sustained higher prices, Barclaycard said.