Next caution underlines UK consumer pressures

A better-than-expected increase in UK retail sales for February has not altered concern that British consumer spending is on an alarming downward trajectory and that domestic demand — a major driver of the UK economy since last year’s Brexit vote — is faltering.

New figures, published yesterday, showed a 1.4% monthly rise in UK retail spend in February. While this was 1% ahead of expectations, underlying figures showed that sales volumes have fallen at their fastest rate in seven years in the past three months.

Unless growth in March is unprecedentedly strong, retail sales looked set to drag on the overall UK economy in the first quarter of 2017. HSBC economist Liz Martins doubted the strength in February alone would continue, with UK consumer price inflation hitting its highest in more than three years last month at 2.3%.