LONDON, Nov. 16 (Xinhua) -- The effects of a spike in inflation caused by sterling weakness continue to be felt in the British economy with retail sales growth subdued.
Retail sales volumes dropped by 0.3 percent annually. These lackluster figures from the Office of National Statistics (ONS) on Thursday come after September's poor retail sales figures which saw a decline of 0.8 percent.
This indicates a continued squeeze on consumers and their spending power, as the decent rate of pay growth, 2.2 percent per annum in the latest September figures, remains outstripped by consumer price inflation (CPI) at 3 percent in October.
Inflation was 0.5 percent at the time of the Brexit referendum vote in June last year but reached 3 percent for this October, according to figures released this week.
Inflation was driven up by a sharp fall in the strength of sterling as foreign exchange markets expressed uncertainty over the Brexit process.
"The outlook for consumers will remain highly challenging over the tail end of 2017. It should gradually improve as 2018 progresses," Howard Archer, chief economic adviser to the EY ITEM Club, financial forecasters in London told Xinhua.
"Real income growth is currently negative, and it looks highly likely to remain so through the final weeks of 2017, said Archer.
He added: "Consumer confidence is relatively fragile with considerable caution over making major purchases. Consumers may also be worried by the recent Bank of England interest rate hike. Lenders are becoming markedly more reluctant to provide unsecured credit to consumers."
