LONDON, April 21 (Xinhua) -- Britain's economy has revealed signs of economic slowdown since the Brexit referendum vote, with retail sales figures taking a sharp fall.
Data released on Friday by the Office for National Statistics (ONS) showed that retail sales figures in the first quarter of 2017 fell sharply, by 1.4 percent quarter on quarter, the weakest quarterly performance since the first quarter of 2010 and the first negative result since 2013.
Consumers cut their spending by 1.3 percent between February and March, leading to a decline of 0.1 percent in the first quarter over the same figures last year.
"This is a really dire retail sales performance -- there is no other word for it," said Howard Archer, the chief UK economist at IHS/Markit, an economics analysis company.
Archer forecast that the poor figures indicated that quarterly gross domestic product (GDP) growth for the first quarter would be 0.4 percent, down from 0.7 percent in the final quarter of 2016.
The figures provided "compelling evidence" that consumers have curbed spending as markedly higher inflation eats into their purchasing power in tandem with subdued earnings growth, said Archer.
Inflation has been on a sharp upward move since the Brexit referendum, driven by a big fall in sterling against foreign currencies due to the uncertainty and shock over Brexit, which has raised the cost of imports and raw materials.
Consumer Price Index (CPI) inflation was at 2.3 percent in March, up from 0.5 percent at the time of the referendum last June.
Ruth Gregory, British economist at Capital Economics, a London-based data analysis firm, said that the drop in retail sales figures suggested the consumer spending slowdown was gathering pace, and added to other evidence indicating that economic recovery has slowed since the end of 2016.
The implications of the slowdown in consumer spending and its likely effect on economic growth are unlikely to persuade the Bank of England (BOE), the central bank, and its rate-setting Monetary Policy Committee (MPC), to raise the bank rate from its current record low of 0.25 percent set last August.
"The very poor March retail sales data reinforce our belief that the Bank of England will not be raising interest rates any time soon as growth concerns cause the MPC to look through a likely prolonged inflation overshoot. The MPC is very aware that consumer spending poses an appreciable downside risk to the growth outlook," said Archer.
He added: "We expect the BOE to sit tight through 2017 and 2018, and very possibly for some time beyond then; much will depend on how the Brexit negotiations develop."
Poor though the figures are, they do not herald a reversal of economic growth, merely a slowdown in its pace. Earlier this week, the IMF increased its forecast for Britain's economic growth, predicting it would show the second strongest growth among advanced economies in 2017, behind only the United States.
Gregory said: "Overall, with credit conditions remaining supportive, and consumers' confidence in the outlook for their own finances still quite strong, we still expect overall household spending to slow this year, rather than collapse outright."