Consumer spending has been unaffected by the UK’s decision to leave the EU, according to new data.
In its latest report the Office of National Statistics (ONS) has revealed that the UK economy grew by 0.6 per cent in the run-up to the EU referendum, despite concerns of a slowdown in the lead up to the vote.
Gross domestic product (GDP) also saw a slight rise on the first quarter, up 0.4 per cent. This is the 14th consecutive increase since the beginning of 2013. The biggest contributor to the growth of GDP was household consumption, which account for two-thirds of GDP growth.
The report also found that retail sales increased by an estimated 5.9 per cent in July compared with the same period last year. Sales increased 1.4 per cent on June 2016, with all sectors reporting growth.
The ONS revealed that the consumer price index (CPI) rose by 0.6 per cent in the year to July 2016. Although this is the highest increase reported since November 2014, it is still relatively low in the historic context.
Input and output prices (PPI) for UK manufacturers also increased, after two years of falls. Total input prices rose by 4.3 per cent in the year to July, compared with a fall of 0.5 per cent in the year to June 2016. Similarly, output prices for goods produced by UK manufacturers rose 0.3 per cent in the year to July 2016, compared with a fall of 0.2 per cent in the year to June 2016.
The ONS said the results suggest that higher input costs are feeding into output prices of manufactured goods. It also claimed that the sharp depreciation of the pound immediately after the EU Referendum result may have impacted on input producer prices.
Throughout July, production remained broadly stable, growing at a monthly rate of 0.1 per cent compared with June. Manufacturing contracted at a monthly rate of 0.9 per cent in July, but remains 0.8 per cent higher than July 2015. Manufacturing output was relatively unchanged.
Despite earlier reports of weakening consumer confidence following the referendum result, the ONS has not seen this reflected in consumer spending.
Figures show that since 2014, ‘durable goods’ – such as furniture and major household appliances – have provided ‘solid’ contributions to growth.
A recent survey issued by accountancy and law firms association UK200Group also supported these results, with the majority (65.4 per cent) of private business owners reporting no change in new business enquiries or sales since the Brexit vote.
The remainder were split, with 10.3 per cent saying their situation had improved and 12.6 per cent feeling it had deteriorated.
With regards to sales, 11.2 per cent believed that the situation had improved and 11.7 per cent felt it had deteriorated.