UK consumers have cut back on summer spending amid the impact of poor weather and the cost of living crisis, figures show, underscoring the challenge for the Bank of England ahead of its interest rate decision on Thursday.
In a sign of weakness in consumer spending over the summer months, figures from the British Retail Consortium (BRC) show that clothing and footwear prices fell for the seventh consecutive month in July as weak demand persisted.
Separate figures from the Bank of England show that credit-card borrowing also slumped in June as poor weather for the time of year and concerns about the cost of living deterred households from spending.
The figures came as financial markets predict the Bank’s interest rate decision on Thursday will be on a knife edge as policymakers consider whether to cut borrowing costs for the first time since the Covid pandemic.
After a drop in headline inflation to the government’s 2% target for two consecutive months, City economists believe Threadneedle Street’s monetary policy committee could narrowly vote to cut interest rates from the current level of 5.25%.
The Bank has said its decision will rest on whether price growth in the service sector of the economy is slowing, and whether Britain’s jobs market is cooling to levels consistent with keeping inflation near 2%.
