April 7, 2017 / 12:24 PM / 8 months ago

UK economy likely expanded 0.5 percent in first quarter - NIESR

LONDON (Reuters) - Britain’s economy probably expanded 0.5 percent in the first quarter of 2017, slowing from growth of 0.7 percent in the final three months of last year, the National Institute of Economic Social Research said on Friday.

Workers walk to work during the morning rush hour in the financial district of Canary Wharf in London, Britain, January 26, 2017. REUTERS/Eddie Keogh

“A key component of this moderation has been relatively weak retail sales in the first two months of this year,” said James Warren, research fellow at NIESR.

“Consumption is expected to moderate further this year as increasing inflation erodes households’ purchasing power.”

Warren added that NIESR expects the Bank of England to “look through” a temporary spike in inflation by keeping monetary policy accommodative.

Official data on Friday showed British industrial output fell unexpectedly in February and manufacturers struggled, adding to signs economic growth may have slowed as Britain prepares to leave the EU.

Reporting by Andy Bruce; editing by Stephen Addison

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