The consumer recovery appears to have got back on track, at least as far as the official retail sales figures indicate. Indeed, consumer confidence still seems to be holding up well despite the looming EU referendum. And even though nominal earnings growth remains quite weak, low inflation is continuing to support real pay growth. Admittedly, it is not all plain sailing for consumers – austerity measures are intensifying again and inflation will pick up gradually over the rest of this year. Nonetheless, we still expect decent rises in real consumer spending of 2.5% this year and next.
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