UK Consumer Cautious as Inflation Ticks Higher

U.K. retailers offered further evidence on Tuesday that they may be in for a tough year.

Amid warnings that faster inflation will squeeze consumers, the British Retail Consortium said the last three months saw the first annual drop in non-food sales since 2011. Food sales increased 2 percent in the three-month period, the BRC data showed.

Official statistics also show that retail sales are falling, while consumer credit remained below its average at the start of the year, according to Bank of England data last week. Inflation picked up to 1.8 percent in January, from 1.6 percent, and is forecast to push close to 3 percent by year end, which will eat into real income growth.

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Craig Erlam

Craig Erlam

Senior Currency Analyst at OANDA
Based in London, England, Craig Erlam joined OANDA in 2015 as a Market Analyst. With more than five years' experience as a financial market analyst and trader, he focuses on both fundamental and technical analysis while conducting macroeconomic commentary. He has been published by The Financial Times, Reuters, the Wall Street Journal and The Telegraph, and he also appears regularly as a guest commentator on networks including Sky News, Bloomberg, CNBC and BBC. Craig holds a full membership to the Society of Technical Analysts and he is recognized as a Certified Financial Technician by the International Federation of Technical Analysts.