Hopes for Sunday trading extension fade as UK retail sales fall Large stores enjoyed a 2pc year-on-year rise in sales during the month, she said, but sales for smaller stores fell 4.5pc. "This may well reflect the suspension of Sunday trading laws during the Olympics period, allowing larger stores normally subject to greater restrictions, to have opened for longer," Ms Clarke added. This may well provide further food for thought for the UK policymakers as they continue to assess ways and means of tweaking policy to provide a boost to UK output . The retail sector is split on the merits of extending trading hours permanently. Tesco and Sainsbury's have spoken out against longer hours, but retailers including Morrisons and Next have said they would support a move to relax the existing laws, particularly in the run-up to Christmas. Sir Philip Green, the owner of fashion empire Arcadia, said oN Thursday that he would support an extension of trading hours in December. The retail sales figures also showed the biggest drop in online sales figures since December 2007. Non-store retail sales by volume fell 6.7pc between July and August. The ONS said: "Feedback from online retailers suggests that sales were lower as consumers watched the Olympics instead of shopping online." However, the Olympics did boost sales of sporting goods and toys. Companies such as John Lewis, Adidas and Sports Direct have all reported a growth in sports-related sales because of London 2012 as the British public snapped up Team GB kit. According to the ONS, out of the 2.7pc rise in retail sales compared with last August, 2.2 percentage points was from a rise in non-food sales. "The largest contribution to growth in the non-food sector came from the other stores category, in particular sporting goods and toys," it added. Feedback from these stores suggests that sales were boosted by an increase in sales of football shirts with the start of the new season and the European Championships but also from increased sales as a result of the Olympics. Nonetheless, Melanie Bowler, UK economist at Moody's Analytics, said the 0.2pc drop in month-on-month sales shows consumers are under pressure. The outlook for retailers through the rest of 2012 and into 2013 is downbeat. Disposable incomes remain squeezed because of austerity," she said.