Sunnier weekends helped food, clothing and footwear sales to pick up from a poor July, but growth remained weaker than earlier this year. Furniture and homewares fell back after good gains in June and July, which were driven by aggressive discounting in clearance sales. DIY and gardening were broadly unchanged and still weather-dependent.

The report concludes that consumer confidence is being hit by interest rate rises. Consumers are cautious about committing to big purchases: heavy discounting is often needed to persuade them to buy.

BRC director general Kevin Hawkins commented: "The arrival of drier, if not warmer, weather has had little effect on retail sales. The squeeze on disposable incomes, reinforced by worries about interest rates, is depressing both retail sales and shop prices. There is no case for another hike in interest rates. The next move should be in the opposite direction."

And Helen Dickinson, head of retail at KPMG, added: "Another disappointing month for many retailers as the slow rate of growth in the industry continues. If the trend continues into September, we will see the lowest quarterly growth rates since the first quarter of 2006. However, it wasn't bad news for all as, for the first time in three months, the food and drink sector put in a robust performance.

"On the other hand, children's clothing and footwear, which we would have expected to do well given the 'back-to-school' focus, managed only a lacklustre performance. The heavy competition and price focus in this sector left like-for-like sales in negative territory."

Looking at the performance of individual sectors, Joscelyne Hynard, senior analyst in the BRC's business information team, said food and drink sales picked up as the weather improved, after a dismal July. Barbecue and picnic foods, salads, fresh fruit and chilled drinks did well on the warmer days and especially over the sunnier weekends. Beers and wines also showed good growth.

The sunnier days helped clothing sales to recover a little from July's downturn, but overall growth was only just positive. Trade was as mixed as the changeable weather and, as in July, menswear held up better than womenswear. Top-end designerwear and accessories remained popular. Childrenswear fell back below year-earlier levels, with back-to-school starting late for some, amid widespread and aggressive competition.

August showed the best overall growth in footwear since April's sun-driven boost. Sun was also behind August's gains for both women's and men's footwear, but children's slipped back after a relatively good July.

Electricals and electronics sales were little changed from July, but wet weather drove footfall and helped sales of brown goods, with flat-panel TVs, home theatre and games consoles continuing to show gains.

For DIY and gardening August was little better than July, as although the weather improved, shoppers were reluctant to buy seasonal products so late in the summer.

Homewares growth slowed after two strong months: both home accessories and house textiles sales were well below last August's good levels.

Similarly, furniture and floorcoverings sales fell back below year-earlier levels after two good months when clearance discounts had attracted purchasers.

Toiletries and cosmetics sales picked up again, having slowed a little in July, and were well up on last August's level. Holidays and sunny weekends helped suncare, though competition was very strong across stores.

The better weather hit indoor leisure products and home entertainment slowed from July. Books held up well, continuing to benefit from the impact of Harry Potter, while back-to-school helped stationery. Outdoor toys, barbecues and sports showed some improvement but failed to make up for July's losses.

BRC/KPMG retail sales monitor UK - Aug 2007

Year-on-year like-for-like (August 2007 v August 2006) UP +1.8%

Year-on-year total sales (August 2007 v August 2006) UP +3.7%

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