LONDON British consumers borrowed more in January than in December but the pace of the increase slowed for a second month in a row, adding to signs of caution among households as last year's Brexit vote pushes up inflation.
Figures from the Bank of England on Wednesday also showed foreign investors sold British government bonds at the fastest pace in nearly three years.
Consumer credit in January rose by 1.416 billion pounds - in line with forecasts in a Reuters poll of economists - and up from an increase of just under 1 billion pounds in December.
But the annual growth rate slowed to 10.3 percent from 10.6 percent in December and 10.9 percent in November, representing the first back-to-back slowdown since mid-2012, when Britain's economy was still struggling to overcome the global financial crisis.
BoE Governor Mark Carney has noted how Britain's growth has been reliant on consumers although a survey published on Wednesday showed the country's manufacturing sector was on course for a strong first quarter of 2017.
Spending by households helped Britain's economy to grow strongly last year, despite the shock of the vote in June to leave the European Union.
The BoE expects growth to slow in 2017 as rising inflation, triggered by the post-Brexit vote fall in the value of the pound, eats into the spending power of consumers.
A separate survey published on Wednesday showed prices in shops fell by the smallest amount in more than three years last month, adding to signs that the post-Brexit fall in the value of the pound is fuelling inflation.
Rising inflation has been on the minds of investors too.
The BoE said foreign investors were net sellers of British government bonds. Net sales totalled 7.591 billion pounds in January compared with sales 2.970 billion pounds in December.
Wednesday's figures from the BoE also showed that the number of mortgages for house purchase approved by lenders increased to 69,928 in January, the highest since February last year and above the median forecast of 68,650 in the Reuters poll.
Last week, the British Bankers' Association, using less comprehensive figures, said banks approved the most mortgages in a year last month and consumer borrowing saw some of its fastest growth of the past decade.
The BoE said net mortgage lending, which lags approvals, rose by 3.379 billion pounds in January, compared with a forecast for an increase of 3.7 billion pounds in the Reuters poll.
(Reporting by Andy Bruce and William Schomberg; firstname.lastname@example.org, +44 20 7542 5109)