In response to the latest retail sales data, Andrew Sentance, senior economic adviser at PwC, commented:
"The rise in inflation which was reported earlier this week is squeezing the growth of retail sales volumes. Last autumn, the annual growth of sales volumes was close to 6% but in the last three months, the rate of increase on a year ago has slipped to 2.3%. This is further evidence that the surge in consumer spending, which sustained UK economic growth since the EU referendum, has come to an end. With prices rising more rapidly, shoppers find their money does not go so far and they are therefore reining in their spending.
"We should expect this subdued growth of consumer spending to continue while inflation remains around 3 percent - and there is a risk it could go even higher. The result is likely to be relatively sluggish economic growth this year and next - with GDP rising by around 1.5% in 2017 and 2018, the weakest period of growth since the euro crisis in 2011 and 2012."
Madeleine Thomson, UK leader of Retail and Consumer at PwC, added:
“The year-on-year growth in retail sales in May 2017 was 0.9%, which is the lowest growth level since April 2013. Increased retail prices across all sectors were a significant factor in slowing that growth.”
“However, weekly online spending was £1.1 billion - an increase of 14.4% compared with May 2016. Online spend accounted for 15.9% as a proportion of all retail spending, compared with 14.3% in May 2016 - which is indicative of the growing consumer trend to shop online to find the best deals available.”
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