Recovery continues, but no consumer boom

Data for the early part of Q4 suggests that the consumer recovery may be stumbling slightly. But the picture should improve in the run-up to Christmas. October’s sharp drop in inflation, combined with recent strong labour market data, may herald a speedier recovery in real earnings, particularly if reports of Government action to reduce energy bills prove to be correct. This would bode well for a pick-up in consumer spending growth in 2014. We continue to expect annual growth in real spending of about 2% for the next couple of years.