The 0.4% m/m rebound in retail sales volumes in August isn’t as good as it looks as it partly reflected a pickup in sales after the unusually wet weather in July. And while the worst of the falls in real household disposable incomes are behind us, the full drag on activity from higher interest rates has yet to be felt. As such, we still think that real consumer spending will decline by 0.5% from its peak to its trough over the coming quarters.
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