British consumers are under increasing pressure, which leads to an increase in inflation, but at the same time, plans for investment in business have strengthened, and the weakness of the dollar has increased exports, the Bank of England said, Reuters reports.
The evaluation of the Bank of England regional agents is generally consistent with what was contained in the political statement last week, when three of the eight members of the regulator’s committee unexpectedly voted to increase the interest rate.
“In the light of the further increase in the inflation of prices for retail goods, the growth of annual revenues in kind continued to slow down, higher price inflation in areas such as foodstuffs also reduced the ability of consumers to finance discretionary large purchases such as household goods,” the statement said. Bank of England.
The central bank also noted that enterprises reported a reduction in the inflow of migrants from mainland Europe due to the low cost of the pound and concerns about their residence status after Britain left the EU.
The head of the Bank of England, Mark Carney, said it is still too early to talk about a possible increase in the key interest rate for the first time in a decade, since it is necessary to see how Brexit talks will take place.
In a speech to bankers in London, Carney said that weak wage growth has raised questions about the strength of domestic inflationary pressures and he is not sure how the economy will react to the negotiations between the UK government and the rest of the EU on the terms of the split.
“From my point of view, given the mixed signals about consumer spending and investment in business and considering the still suppressed internal inflationary pressures, in particular the weak growth of wages, now is not the time to begin the adjustment,” he said.