The Bank of England reported on Wednesday that consumers were under growing pressure form rising inflation, but business investment plans had strengthened and sterling weakness was boosting export volumes.
The assessment from the BoE’s regional agents broadly matches that in last week’s policy statement, when three of the BoE’s eight rate-setters unexpectedly voted to increase the cost of borrowing.
“In light of the further increase in price inflation for retail goods … annual sales growth in volume terms had continued to slow. Higher price inflation in areas such as food had also squeezed consumers’ ability to fund discretionary big-ticket purchases such as homeware,” the BoE said.
The central bank also said businesses had reported reduced inflows of migrants from continental Europe, due to the weaker value of the pound and concerns about their residency status after Britain leaves the EU.
(Reporting by David Milliken, editing by Estelle Shirbon)