During the week, two key economic reports are due in the United Kingdom: inflation and retail sales. Analysts from Wells Fargo, point out that the culprit behind the slowdown in consumer spending appears to be higher inflation.
“Real GDP growth in the United Kingdom has been driven largely by consumer spending in recent years. However, growth in real retail spending has weakened recently, which has led to deceleration in the British economy this year. The culprit behind the slowdown in
consumer spending appears to be higher inflation, spurred by depreciation of the British pound in the wake of last June’s Brexit referendum, which has eroded growth in real disposable income. Data for retail spending in June are on the docket on Thursday.”
“Speaking of inflation, data on CPI inflation in June will print on Tuesday. The year-over-year rate of CPI inflation rose to a four-year high of 2.9 percent in June, well above the Bank of England’s target of 2 percent. Although there are some members of the Monetary Policy Committee who would like to raise rates, most members believe that inflation will drift lower in coming months due to the sluggish pace of economic growth at present.”
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