| Follow us on:
|
Boats of a flotilla participate in a campaign supporting Britain to leave the European Union in London, Britain, on June 15, 2016. While the UK’s growth will likely be slower, manufacturing is up, but inflation is beginning to bite the average consumer [Xinhua]
January’s inflation was at 1.8 per cent – a 30-month high, which is discouraging retail sales.
These fell in January for the third consecutive month. Exacerbating the situation is that there has been no momentum in wage growth.
The Office for National Statistics says that the volume “bought in the retail industry is estimated to have increased by 1.5 per cent compared with January 2016, the lowest growth since November 2013”.
Retail sales fell 0.4 per cent in the three months to January.
As an example of comparison, the quantity of food bought decreased 0.2 per cent year on year, while the average store price increased 0.2 per cent for the same period.
The import of most items has especially been hard on consumers who are feeling the pinch of the 16 per cent weakening of the sterling pound. This is likely to push inflationary trends for the rest of 2017.
This is unwelcome news for those who said Brexit would be economically sound for the UK and after a rise in manufacturing and export of locally produced goods.
Earlier in the year, there were mixed signals as to where the UK economy was heading.
According to the Markit/Cips survey of the sector, manufacturing rose to its highest level in 30 months reaching 56.1 in December.
This marked the fifth such consecutive rise in the Purchasing Managers Index (PMI); in November, it stood at 53.6.
The weakened pound is also a boon for tourists who have flocked to the UK, but a curse to importers who have faced sudden currency inflation.
The boost in tourism numbers has partially helped the services sector weather out Brexit and and continue to expand.
But a survey of business managers carried out by Chartered Management Institute (CMI) and published in the Independent revealed that 65 per cent believe Brexit will hinder the UK’s economic growth.
It grew at 2.2 per cent in 2016, one of the EU’s most robust and stable economies in the past two years, but the forecast for 2017 is a mere 1.2 per cent.
The BRICS Post with inputs from Agencies
