Retail sales have lost some of their shine, but are still performing rather better than might be expected given the economic backdrop. However, spending off the high street is certainly still suffering. And we continue to think that the high street faces a renewed period of weakness before long. Disposable incomes have been boosted by falling interest payments and inflation. But slowing pay growth and rising unemployment will increasingly offset this boost. In addition, rising job insecurity and concerns about future tax rises means that any extra income is likely to be saved. We still think that consumer spending will fall by around 3.5% in real terms this year, although the drop in retail sales now looks set to be slightly smaller than this.
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