The RFI, which measures visitors to UK retailers, suggests that despite extreme peaks and troughs in footfall levels in recent months, due to events such as the World Cup and the warm weather, underlying activity in August seemed to be improving.

Martin Davies, director of retail planning for Experian, said: "This is a strong month-on-month gain, and while monthly changes in shopping activity can be volatile and influenced by seasonality, the fact it is backed up by the least negative year-on-year change in 13 months emphasises its importance. It could suggest the start of an improvement for the retail sector although this could be short-lived following the recent upward move in interest rates.

"It is important to recognise that retail spending in 2006 will fail to match the buoyancy seen during much of the past decade. This is because many factors that contribute to decreased consumer spending, notably higher fuel bills, rising unemployment, weaker disposable income growth and record levels of consumer borrowing, look set to remain.

"There are also fears that further interest rate hikes are on the horizon, with the Bank of England's Monetary Policy Committee concerned about firmer than expected inflation and activity data.

"In our view, the case for further rate increases in the near term remains finely balanced."

Retail Footfall Index UK - August

Month-on-month (August 2006 v July 2006) UP +3.3%

Year-on-year (August 2006 v August 2005) DOWN -0.7%

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