British retail sales unexpectedly rise in August

LONDON, Sept 18 (Reuters) - British retail sales showed a surprise increase of 0.5% in August despite the latest jump in fuel prices caused by the resumption of the Iran war, official figures showed on Friday.

Most economists polled by Reuters had forecast a 0.2% drop in sales volumes compared with July when they fell by 0.5%.

Consumers increased their spending sharply in the previous two months, encouraged by sunny weather and the start of the men's soccer World Cup in June.

August's increase was driven by online sales and shopping in department stores with clothes and food sales also up, the Office for National Statistics data showed.

Fuel sales fell by 1.3% compared with July.

Compared with August last year, overall sales volumes were up by 2.4%.

Sterling was little changed against the dollar after the data was published.

Recent updates from major British retailers have been subdued.

Discount fashion retailer Primark ABF.L reported flat underlying UK sales growth for its fourth quarter and the John Lewis Partnership reported wider first half losses.

Clothing retailer Next NXT.L cut its forecast for sales growth in the coming months, highlighting concerns over the UK economy, while industry data has shown flat food sales in August.

On Thursday, the Bank of England kept interest rates on hold but said it might have to increase them if the Iran war persists and keeps adding to inflation pressure.

Prime Minister Andy Burnham has offered some cost-of-living help to households but he and finance minister John Healey have little room for more giveaways in the first budget of the new government on October 28.