But the picture still remains negative, according to a closely watched index of shopper sentiment.

The figures, by research group GfK, suggest consumer demand has been resilient to the shocks of rising prices and more expensive borrowing.

The long-running consumer confidence index had dropped in July at the same time as retail sales fell due to some of the heaviest rainfall ever recorded in July. It was the first fall since January.

Prior to the fall last month, consumer confidence in June had been at its strongest in 17 months and had grown for five months in a row.

The future signs for the economy are good, despite inflation and high food price rises putting pressure on budgets, and 14 consecutive interest rate hikes making borrowing more expensive.

Changes in personal finances were viewed more positively as the index tracking those changes over the last year is up 10 points on August 2022.

GfK's forecast for personal finances over the next 12 months grew 28 points higher than August 2022 and four points up from July to -3.

Expectations for the general economic situation over the year have increased by three points to -30 since last month and is 30 points better than a year ago.

There was potential good news for retailers as there was an eight point rise in major purchase intentions.

The savings index is up one point to +27, nine points higher than the same month last year as high interest rates give a greater return to savers.

While the cost of living crisis continues, wages are rising and for the first time in nearly two years private sector wage growth overtook inflation.

The overall index score increased five points but was in negative territory at -25 in August.

"While the financial pulse of the nation is still weak, these signs of optimism are welcome during this challenging time for consumers across the UK," Joe Staton, the client strategy director at GfK, said.