Consumers continue to benefit from easing inflation

The outlook remains bright for further strong growth in consumer spending over the coming quarters. Although the jobs recovery has slowed, the economy has retained a healthy degree of momentum, suggesting that productivity is finally on the rise. This bodes well for a pick-up in wages over the coming months. In addition, with cost pressures remaining markedly subdued, consumer price inflation looks set to continue to ease, perhaps to below 1% by the end of the year. This, in turn, should provide a much-needed boost to consumers’ real earnings, and therefore offer a more robust foundation for continued strong growth in spending.