LONDON, U.K.: British shoppers snapped up new iPhones and gold jewelry in September, driving an unexpected rise in retail sales and offering a welcome boost to an economy that has struggled with sluggish growth and sticky inflation.

Retail sales volumes climbed 0.5 percent in September, defying economists' forecasts for a 0.2 percent decline, data from the Office for National Statistics (ONS) showed on October 24. The surprise jump helped lift overall third-quarter sales growth to 0.9 percent, up from 0.2 percent in the second quarter. This increase is expected to add 0.04 percentage points to GDP for the period.

Sterling rose against the dollar after the figures were released.

ONS statistician Hannah Finselbach said the gain reflected stronger-than-expected demand for tech and jewelry. "Tech store sales rose notably, while online jewelers reported strong demand for gold," she said.

Gold prices have climbed to record highs on global commodity markets in recent weeks, helping online retailers benefit from a surge in precious-metal demand. Meanwhile, the launch of Apple's latest iPhone models gave electronics retailers a sharp lift heading into the autumn season.

The figures cap a summer of relatively solid retail performance, with warm weather earlier in the season boosting clothing and outdoor goods sales.

Retail volumes in September were 1.5 percent higher than a year earlier, beating expectations for a 0.4 percent rise and marking the most substantial annual gain since 2022. Online sales were the key driver, with spending growth hitting its fastest pace since April 2021. For the entire third quarter, sales volumes rose 1.0 percent, reaching their highest level in three years.

Britain's longest-running consumer confidence survey from GfK also pointed to modest improvement, with its October reading the joint-highest since August 2024.

Still, analysts warned that the retail rebound may prove short-lived as household budgets remain under pressure.

"Against a backdrop of weak employment, high inflation, and with tax rises on the horizon, we doubt the retail sector will be able to sustain this strength," said Alex Kerr, UK economist at Capital Economics.

While sales have benefited from one-off factors such as tech launches, economists note that broader consumer spending remains subdued. Many households continue to save rather than spend, reflecting lingering caution after the 2022 inflation surge and a recent cooling in the labor market.

Consumer inflation has held at 3.8 percent for three straight months — nearly double the Bank of England's two percent target — while wage growth has slowed. Finance minister Rachel Reeves is expected to outline at least 20 billion pounds (US$27 billion) in tax increases or spending cuts in next month's budget to rein in public finances.

Those headwinds could limit retail momentum heading into the holiday season, even as retailers prepare for Black Friday and Christmas promotions.

Recent updates from Britain's most prominent retail names have painted a mixed picture.

Tesco, the country's largest food retailer, raised its full-year profit forecast and said it was "betting on a good Christmas." In contrast, Greggs reported another slowdown in sales growth, while discount chain B&M issued two profit warnings in less than three weeks.

According to a survey by the online platform Shopify, British consumers still plan to spend more on seasonal shopping this year. They will spend an average of 181 pounds on Christmas goods like advent calendars and ornaments, up from 159 pounds in 2024.

Even so, economists say sustained growth will depend on whether wage gains and inflation align in the coming months.