(Bloomberg) -- U.K. consumer credit remained below average in January, reinforcing a picture of weakening confidence as inflation bites.
Unsecured lending rose by 1.4 billion pounds ($1.7 billion) from December, below the 1.6 billion pounds averaged over the previous six months, according to Bank of England data published on Wednesday. On an annual basis, credit growth slowed to 10.3 percent, the least since August last year.
The figures add to evidence that consumer spending, the engine of the U.K. economy, is losing momentum as living standards come under pressure from rising food and fuel costs.
Retail sales grew at their slowest pace in three years in January and surveys show consumer confidence is weakening. Import prices are up by a fifth in the past year, largely as a result of sterling's 16 percent decline since the June Brexit vote.
Data on mortgage lending suggest the housing market maintained momentum going into the new year, despite a slowdown in London. The number of approvals rose to 69,928, the most in almost a year. Net mortgage lending was 3.4 billion pounds.
Lending to non-financial firms rose 3.7 billion pounds, the biggest increase in a year. Overseas investors sold a net 7.6 billion pounds of gilts, the largest amount since March 2014.
In December, consumer credit recorded its weakest growth since May 2015, growing just 1 billion pounds. The 0.7 percent increase in January was led by bank loans, which climbed by 0.9 percent. Credit-card borrowing rose just 0.5 percent.
Evidence that consumers are becoming more cautious about taking on debt may come as a relief to BOE Governor Mark Carney, who has signaled growing concern among officials about the pace of borrowing.
But it increases pressure on Chancellor of the Exchequer Philip Hammond to provide relief to the hardest-pressed households when he announces his Budget to Parliament next week
To contact the reporter on this story: Lucy Meakin in London at lmeakin1@bloomberg.net.
To contact the editors responsible for this story: Fergal O'Brien at fobrien@bloomberg.net, Andrew Atkinson
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