Britain's decision to leave the European Union has had a profound impact on the world's fifth largest economy, but recent data suggests not all of the influences have been negative, leaving investors with a series of uncertainties in the months ahead.
U.K. retail sales growth slowed to 0.9% last month, data from the country's biggest industry lobby group showed Tuesday, as shoppers trimmed non-essential spending in favor of food purchases. The British Retail Consortium, which publishes the data along with KPMG, said food sales rose 2.3% in the three months ending in July, compared to a 0.7% gain in non-food spending.
"The month's growth was underpinned by food sales alone, while non- food sales relapsed into negative territory as the competition heats up over a shrinking pool of discretionary consumer spending power," the BRC said.
Consumer spending, one of the most important drivers of U.K. growth last year, slowed significantly over the first six months of this year as Britons pulled back on non-essential spending amid a surge in prices, a fall in the pound on foreign exchange markets and flat domestic wage growth.
"Consumption is projected to remain subdued in coming quarters, as real income growth remains weak and households continue to adjust to past falls in their purchasing power," the Bank of England noted in its recent assessment of the British economy, in which it trimmed its forecasts for growth both this year and next. "The pace at which households moderate their spending in response will be a key determinant of the outlook for overall GDP growth."
