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Bets are being placed on a December Bank of England (BoE) rate cut, as watchers of the UK economy pare back their bullishness on Threadneedle Street's next moves.

Deutsche Bank's (DBK.DE) latest UK economic note on the potential rate path said its economists had moved expectations of the next cut from November to December. It based that on more communication from the Bank as well as the later timing of the autumn budget.

The BoE's next rate-setting meeting is on 18 September. Chancellor Rachel Reeves pencilled the next raft of economic policy announcements for 26 November — the last autumn budget fell at the end of October.

Deutsche Bank also cited an accumulation of data by the end of the year — including clarity on pay settlement data by December.

"The [monetary policy committee] MPC will see a cumulative four further GDP reports, four further labour market reports, and four further inflation reports before deciding whether to tweak Bank Rate further," Deutsche Bank said.

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Meanwhile, the latest retail sales data from the British Retail Consortium showed sales were up 3.1% in August driven by good weather and an interest rate cut to round off a “solid” summer.

The year-on-year uptick for total sales across the UK was up on last August’s 1% and the 12-month average of 2%, according to the British Retail Consortium (BRC)-KPMG Retail Sales Monitor.

Computing and mobile phones performed well as parents readied children for the new academic year, but new school clothing and footwear did not sell as well as expected as some families opted for second-hand alternatives, the BRC said.

Food sales increased by 4.7% year on year, against last August’s growth of 3.9% and above the 12-month average growth of 3.3%, although this was largely down to rising prices — up more than 4% over the month — rather than increasing volumes.

Non-food sales increased by 1.8% against a decline of 1.4% a year ago, with sales of home goods seeing monthly increases since the spike in property transactions ahead of the stamp duty changes in April.

Home appliances, accessories, and DIY and garden goods all saw sales growth in August.

BRC chief executive Helen Dickinson said: “Sunny weather and an interest rate cut helped August round off a solid summer of sales.

“Despite a better summer, retailers approach the ‘golden quarter’ with caution. With the later-than-expected Budget falling just days before Black Friday, many are uneasy about how consumer confidence and spending could be impacted by tax rise speculation in the run-up to Christmas.”

Sarah Bradbury, chief executive of the Institute of Grocery Distribution (IGD), said: “As shoppers settle back into reality after the hottest summer on record, food price inflation rose sharply in line with IGD’s forecast, reaching 4.9% in July, driven by staples like beef, chocolate, and coffee.

“Shopper confidence fell for the third consecutive month to minus one, with many expecting food prices to climb even further.

“The emotional weight of rising energy bills and fears of tax hikes in the autumn budget are adding to the strain, especially as unemployment ticks upward. Yet, there are glimmers of relief: interest rates have been cut again, and mortgage rates are easing, offering some financial respite."