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Strains in UK consumption are pinching UK growth prospects, according to the influential National Institute of Economic and Social Research.

The research house today said today that after growth of 0.6 per cent in the final quarter of 2016, expansion slowed slightly to 0.5 per cent in the three months to the end of March. NIESR’s rolling three-month measure also stood at 0.5 per cent in the period ending in February.

James Warren, research fellow at NIESR, said:

We estimate growth slowed slightly in the first quarter of 2017 to 0.5 per cent. A key component of this moderation has been relatively weak retail sales in the first two months of this year. Consumption is expected to moderate further this year as increasing inflation erodes households’ purchasing power. We expect the Bank of England to look through this temporary shock to inflation and for monetary policy to remain accommodative.

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