United Kingdom retail sales fell on the month in September, reversing the previous month's gains and pointing to a continued living standards squeeze British households have faced since the Brexit vote a year ago.
The UK National Statistics Institute announced this morning that inflation has been shot in September to 3%, its maximum in last five and a half years, a situation that could force government to increase rates of Interest to wear situation.
Something that since British Chamber of Commerce is not so clear, since one of its economic managers, Suren Thiru, says that y already knew that "inflation was going to increase briefly before lowering in 2018, when post referendum effects of fall drop" "of being in equation".
The decline was driven largely by a fall in sales of non-essential items, such as spectacles, souvenirs, weapons and collectables.
Taking a longer term view, Khalaf said the United Kingdom consumer has actually been relatively resilient to rising inflation and weak wage growth, and retail sales volumes are still ahead of where they were a year ago despite these headwinds.
This was the first fall in four months and the biggest since March.
In the retail sector, sales increased by 1.2 per cent with non-food products such as household goods and clothes and non-store retailing all providing growth. This was also weaker than the expected 2.1 percent.
To this end, Thiru has asked those responsible for Bank of England to "resist temptation to increase interest rates, at present at 0.25%, especially during this period of great political uncertainty". "On top of that the Bank could well find its credibility compromised if it fails to follow through on its recent hawkish commentary, and would once again be on the hook for providing "forward misguidance".
With inflation likely to stay up around 3 percent for the next few months, albeit set to peak in October, and wage growth set to hover just above 2 percent in the medium-term, the pressure on household budgets is unlikely to dissipate for at least a couple more quarter, Smith added.
"However, it is true that things remain challenging for the retail industry".
"Moreover, consumer confidence is relatively fragile with considerable caution over making major purchases". Significantly, there are signs that consumers are now reining in their borrowing.
"A hike would help control inflation, but would further ease demand in the retail sector, whereas keeping rates on hold would favour demand, but could see inflation rising above the BoE's 3.0% maximum estimate of inflation". Once inflation is taken into...