U.K. retail sales likely to have grown in June

The U.K.’s real GDP growth has been mainly driven by consumer spending in recent years. But growth in retail spending has softened recently, leading to slowdown in the British economy in 2017. The main cause for the deceleration in consumer spending seems to be higher inflation, spurred by depreciation of the British pound in the wake of June 2016’s Brexit referendum that has eroded growth in real disposable income. Data for retail spending in June are set to be released this week. According to consensus, retail spending is likely to have come in at 0.5 percent.

Meanwhile, the nation’s year-on-year headline inflation had risen to a four-year high of 2.9 percent in June, above the central bank’s target of 2 percent. Although there are some members of the MPC who would like to hike rates, most members believe that inflation would drift lower in months ahead because of the sluggish pace of economic growth at present, noted Wells Fargo in a research report.

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