The consumer sector gains momentum in Q3

Retail sales volumes rose in August despite the boost to sales from July’s warm weather and the World Cup unwinding. Indeed, while food sales fell in August, this was more than made up for by the largest monthly jump in sales of household goods since May 2016. And although strong retail sales growth can sometimes by offset by households reigning in spending elsewhere other indicators, such as the Bank of England’s measure of consumer services turnover, point to consumer spending growth off the high street picking up in Q3 too. Further ahead, given recent signs of an acceleration in wage growth, and our expectation that inflation will gradually ease over the coming year, we should start to see a recovery in consumer spending growth, from 1.1% in Q2 2018, to around 2% in 2019.