Shoppers will get a reprieve this week when the Bank of England confirms it will hold off from raising interest rates.
Economists expect the Monetary Policy Committee to vote for no change when it meets on Wednesday, leaving consumers with more in their wallets and purses.
A quarter-point rise was on the cards for the May meeting of the MPC, but weak growth in the first quarter of the year is likely to deter policymakers.
Rate rise? Weak growth in the first quarter of the year is likely to deter Bank policymakers
‘An increase now could be one headwind too many for the faltering consumer-facing sector,’ said James Smith, an economist at banking group ING.
A big decline in construction activity was behind the slowing growth in the first quarter. The demise of Carillion, as well as the bad weather, was thought to be responsible for the 3.3 per cent fall in construction activity.
But more recent data covering the services sector – which makes up by far the largest share of the UK economy –suggests the weakness is more widespread.
Purchasing managers’ figures for April were subdued for services, which includes everything from banking to restaurants and property.
Samuel Tombs, UK economist at consultancy Pantheon Macroeconomics, said: ‘April’s weak reading can’t be blamed on the weather.’
Tombs expects a hike in August instead, but said the committee is unlikely to give any guidance over the timing this week.