February’s retail sales figures showed that spending growth has been fairly feeble so far this quarter. As such, it would now take a monthly increase in excess of 2% in March to see sales in Q1 match Q4’s 0.5% rise. But this seems extremely unlikely given disruption due to the severe weather at the start of March. On average, retail sales have fallen by over 1% on the month following previous instances of heavy snowfall – although some of this lost spending may well be made up at a later date. Nonetheless, things are looking up for the sector. For a start, the timelier survey measures suggest that high-street spending growth is now turning a corner. And with CPI inflation likely to continue to fall back this year and clearer signs of a revival in pay growth, consumer spending should receive more fundamental support as the year progresses. Overall, we expect annual spending growth to recover from its current rate of 1.4% in Q4 to around 2% by early-2019, helping the economy to regain a bit of momentum.
Become a client to read more
This is premium content that requires an active Capital Economics subscription to view.
Already have an account?
You may already have access to this premium content as part of a paid subscription.
Sign in to read the content in full or get details of how you can access it
Register for free
Sign up for a free account to:
- Unlock additional content
- Register for Capital Economics events
- Receive email updates and economist-curated newsletters
- Request a free trial of our services