Groundwork for a strong 2019 in place

A boost to retail sales in November from Black Friday saw sales record their largest monthly increase since May. Nonetheless, as this followed two consecutive monthly falls, the retail sector will end the year with a whimper. In fact, despite a strong summer for the retail sector, consumer spending as a whole is set to record its smallest annual rise since 2011. However, things should improve. The fall in oil prices means inflation is likely to fall back to the 2% target over the coming months and annual pay growth has risen to over 3%. The upshot is that solid increases in real pay, combined with high employment, will pave the way for an acceleration in consumer spending growth in 2019 if a no deal Brexit is avoided.