UK retail sales growth increased last month, but the upward trend still failed to keep up with rising inflation.

According to figures from the British Retail Consortium (BRC), overall sales were up 2.3 per cent in July.

But the trade association said that given inflation is running at historically high levels, the small rise in sales masked a much larger drop in volumes.

KPMG, which publishes the figures alongside the BRC, warned that the summer could be the “lull before the storm”.

The company’s UK head of retail, Paul Martin, said that conditions are set to get tougher as consumers arrive back from summer breaks to "holiday credit card bills, another energy price hike and rising interest rates".

“With stronger cost of living headwinds on the horizon, consumers will have to prioritise essentials, and discretionary product spending will come under pressure,” said Martin. “As margins continue to be challenged, and costs continuing to rise, a significant drop in demand come the Autumn will have detrimental impact on the health of the retail sector.”

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