Retail sales in the U.K. rebounded in August, helped by online sales, as consumers shrugged off recently rising inflation.

Sales volumes were up 0.5% on month, flipping the 0.5% fall in July. Economists polled by The Wall Street Journal expected a 0.1% decline.

Nonstore sales--typically online--rebounded in August, while sales in department stores also improved after stock availability issues in July, the Office for National Statistics said. Some of July's overall decline in retail sales was due to seasonal discounting in June.

However, fuel sales were down in August amid surging prices due to the escalating conflict in the Middle East. Headline inflation climbed to 3.1% in August, from 2.9% in July.

The Bank of England held interest rates this week, judging that the increase in energy costs hadn't significantly bled into other parts of the economy. Still, investors expect the bank to raise rates before the end of the year.

The British consumer has been relatively resilient to the impact of the war so far this year. Sales volumes were up 2.4% compared with the same month of 2025, and consumer confidence has recovered above levels seen before the conflict. The pickup in retail sales should contribute to economic growth in the third quarter.

But with the peak in inflation ahead in the next few months, the biggest drag on households' real incomes has yet to come, said Paul Dales, economist at Capital Economics.

"For now, the resilience of the economy is one more thing nudging the BOE closer to raising interest rates," he said.