Spending likely to have grown in Q3

Following its fall in the second quarter, real household spending appears to have put in a stronger performance in Q3. Although retail sales volumes fell back a touch in August, spending on the high street is still on track to be higher than in the second quarter. And while the Olympics did not seem to boost retail spending, there are signs that hotels and restaurants benefited from the Games. Nonetheless, given that confidence is still very weak and inflation looks set to remain above pay growth for most of the next year, any bounce in spending in Q3 seems likely to be short-lived.