The strong 3.8% rebound in retail sales in January is not quite as good as it looks, since it is mainly a recovery from the revised 2.5% drop in December. But with the modest decline in food and drink services spending suggesting the Omicron wave did little to hit demand, and autos spending rebounding sharply as shortages ease, real consumption growth now looks set to slow to only 2.0% annualised in the first quarter, up from our previous estimate of 0.5%. As a result, we are revising our forecast for first quarter GDP growth up to 1.0%, from minus 0.5%.
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