Spending suffers as inflation nears peak

With real incomes under pressure from subdued nominal pay growth and rising inflation, it isn’t surprising that spending growth on the high street lost more momentum. Indeed, annual retail sales volumes growth dropped to its lowest since March 2013 in October, while surveys of non-retail spending have painted a fairly subdued picture too. But there are reasons to think that retail sales volumes growth won’t slow much further. For a start, with unusually warm weather hitting purchases of winter clothing ranges, there is scope for a rebound in clothing sales over the coming months now that the weather has turned more seasonal. More generally, with inflation set to drop next year, the squeeze on households’ finances should soon ease, paving the way for a rebound in consumer spending growth.