Weak pound pushes UK household spending growth to slowest since 2014

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Shoppers queue to pay for their shopping in the Tesco Extra superstore on April 20, 2009 in New Malden, Surrey, England.

Overall growth in gross domestic product was unrevised from an earlier estimate at 0.3 percent on a quarterly basis and 1.7 percent annually, the ONS added – representing the weakest start to any year since 2012.

“GDP growth has slowed markedly in the first half of the year,” ONS statistician Darren Morgan said. “Household spending grew weakly, with the lower-value pound hitting household budgets,” he added.

Sterling has fallen by around 15 percent on a trade-weighted since June 2016’s vote to leave the European Union, pushing consumer price inflation to its highest in nearly four years in May, and added to its losses after the latest data.

Thursday’s figures also showed that year-on-year business investment growth slowed to zero from 0.7 percent in the first quarter, while net trade dragged down the annual growth rate by 0.5 percent.

Britain’s economy grew 1.8 percent last year, one of the fastest rates among the world’s seven largest advanced economies, capped by growth of 0.7 percent in the last three months of the year.

But that growth relied heavily on robust consumer spending, which this year has come under increased pressure from rising inflation as stores push up prices in response to sterling’s sharp fall after the Brexit vote.