LONDON (Reuters) - The third consecutive monthly decline in British retail sales shown in the latest official data demonstrates clearly how rising inflation dampens consumers’ enthusiasm for spending.
Retail sales volumes fell 0.3 percent in January, the Office for National Statistics said on Friday, confounding all 24 forecasters in a Reuters poll who had expected a rebound from December’s slump.
It may all be down to inflation.
As the following graphic shows - reut.rs/2kwTRyp - retail sales volumes have run with an inverse relationship to consumer price inflation over the last 10 years.
Statistically, there is a strong inverse correlation co-efficient of -0.83 between moves in inflation and retail sales one month later.
Economists said this was the strongest sign to date that the country’s economy is set to slow.
Consumers, a pillar of British economic growth, may now be turning cautious as prices rising quickly in response to the post-Brexit vote slump in the value of the pound and higher oil prices.
Reporting by Andy Bruce, editing by Jeremy Gaunt
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