(Bloomberg) -- U.K. retail sales grew at their fastest annual pace in more than a year this month, according to the Confederation of British Industry, which also warned that pressure on shoppers' budgets could increase over the coming year.
The CBI's monthly retail-sales index climbed to 35 in December, the highest since September 2015, from 26 in November. Clothing and hardware stores led the gain, which “rounds off a fairly solid quarter” for retailers, the group said on Tuesday.
The CBI also said that inflation fueled by the pound's drop against all major global currencies looks set to squeeze consumers in the coming year. Consumer-price growth, at 1.2 percent last month, could accelerate to 2.3 percent by the second quarter of 2017.
“While we still expect to see decent growth in the near term, the pressures on retail activity are likely to increase during 2017,” said Ben Jones, principal economist at the CBI. “With higher inflation beginning to weigh on households' purchasing power, consumption patterns are likely to shift, creating winners and losers across the retail landscape.”
--With assistance from Ainhoa Goyeneche
To contact the reporter on this story: Lucy Meakin in London at lmeakin1@bloomberg.net.
To contact the editors responsible for this story: Paul Gordon at pgordon6@bloomberg.net, Fergal O'Brien, Kevin Costelloe
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