British shoppers spent more than expected last month as many were enticed by online shopping promotions, despite a weaker picture recently as households battled the highest inflation in more than 40 years, official figures showed on Friday.
Retail sales volumes, adjusted for inflation and the time of year, rose 0.3% on the month in July after a downwardly revised drop of 0.2% in June, the Office for National Statistics (ONS) said.
Sales have fallen by 1.2% over the past three months and were 3.4% lower than a year ago.
Economists polled by Reuters had forecast a 0.2% monthly drop in sales volumes and a 3.3% annual fall.
"Online sales did pick up this month, as retailers told us that sales were boosted by a range of offers and promotions. However, fuel sales fell with some evidence suggesting the very hot weather meant fewer people travelling," ONS statistician Darren Morgan said.
Amazon held its annual Prime Day promotion last month, which in previous years has coincided with an uptick in British retail sales, although the ONS said greater spending was recorded by a range of online retailers, especially for household goods.
However the longer-term trend for sales was downward, the ONS said, and the Bank of England has warned that high inflation is likely to tip Britain into recession later this year.
Consumer price inflation jumped to an annual rate of 10.1% in July, its highest since 1982, from 9.4% in June, driven by an increase in food prices on top of previous sharp rises in household energy bills.
A GfK consumer survey earlier on Friday showed households were "exasperated" by the surging cost of living, and that their sentiment was the weakest since the series began in 1974.
Britain's budget deficit was bigger than expected in July, official data showed, underscoring the challenges facing the country's next prime minister to provide more support to consumers hit by sky-rocketing energy costs.
The Office for National Statistics said on Friday that public sector borrowing excluding state-owned banks stood at £4.944bn (€5.84bn).
A Reuters poll of economists had pointed to borrowing of £2.8bn (€3.31bn) for the shortfall in July which is typically a month when income tax receipts flow into the public coffers.