UK retail sales volumes increased 0.5% month-on-month in August 2026, reversing July’s 0.5% decline and outperforming forecasts for a fall. Existing reports put the expected decline at 0.1%, while the latest account cited a 0.2% contraction. Department stores resolved stock availability issues, helping lift non-food sales, while online retailers partly recovered after June promotions had shifted demand forward. Food stores also performed strongly over the three months to August, whereas fuel sales fell as higher prices changed refuelling habits. The pound was little changed at $1.337 on Friday, close to its weakest level since late July, as investors weighed the retail-sales figures and central-bank decisions. UK 10-year gilt yields rose to 5.25% on Friday after declining by more than 10 basis points in the previous session. The Bank of England left rates unchanged and said it would stop selling very long-dated gilts under its quantitative tightening programme, while warning that a prolonged Middle East conflict could require tighter policy. The Federal Reserve and Bank of Japan raised rates during the week and indicated scope for further tightening this year, while Brent crude fell as concerns about Saudi supply disruptions eased.