February’s retail sales figures showed that spending growth has been fairly feeble so far this quarter. As such, it would now take a monthly increase in excess of 2% in March to see sales in Q1 match Q4’s 0.5% rise. But this seems extremely unlikely given disruption due to the severe weather at the start of March. On average, retail sales have fallen by over 1% on the month following previous instances of heavy snowfall – although some of this lost spending may well be made up at a later date. Nonetheless, things are looking up for the sector. For a start, the timelier survey measures suggest that high-street spending growth is now turning a corner. And with CPI inflation likely to continue to fall back this year and clearer signs of a revival in pay growth, consumer spending should receive more fundamental support as the year progresses. Overall, we expect annual spending growth to recover from its current rate of 1.4% in Q4 to around 2% by early-2019, helping the economy to regain a bit of momentum.
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