UK discretionary retail sales grew at a slower pace in August, raising concerns about consumer demand as the sector approaches its crucial Christmas trading period.

Sales across discretionary categories increased 2.2 per cent compared with the same month last year, according to BDO’s High Street Sales Tracker, down from annual growth of 3.9 per cent in August 2025.

BDO said the increase remained below inflation, indicating that the volume of goods sold had fallen. It marked the sixth month this year in which sales growth failed to keep pace with price increases.

The figures cover discretionary spending rather than the entire retail market. The latest official data from the Office for National Statistics showed overall retail sales volumes fell 0.5 per cent in July, although they remained 1.6 per cent higher than a year earlier. Sales volumes were up 1.1 per cent over the three months to July.

August is traditionally supported by back-to-school purchases and the arrival of autumn clothing ranges. But BDO recorded store sales growth of 3.6 per cent, down from 5.2 per cent a year earlier, while non-store sales rose 2.3 per cent compared with 6.6 per cent last August.

Retailers also face renewed pressure on household budgets this autumn. Ofgem has confirmed that its energy price cap will increase 4 per cent from October, taking the annualised bill for a typical dual-fuel household paying by direct debit from £1,663 to £1,723. The regulator attributed the increase principally to higher wholesale gas prices linked to the Middle East conflict.

Sophie Michael, head of retail and wholesale at BDO, said record summer temperatures had failed to produce a significant spending boost.

“Whilst August is traditionally a strong month for the sector, this disappointing set of figures points to deeper issues where consumers remain reluctant to spend on non-essential items,” she said.

Michael warned that retailers were now entering the “Golden Quarter” facing uncertainty over household spending, supply-chain costs and geopolitical risks, with many having already made decisions about Christmas stock levels.

After a disappointing festive trading period last year, she added, retailers would be particularly wary of getting those decisions wrong.