Private sector growth picked up in February as services geared towards consumers continued to impress, according to a survey of British companies.
The balance of firms from across the UK economy reporting growth increased from 10 per cent to 15 per cent positive in the three months to February, according to the Confederation of British Industry (CBI).
The UK consumer has been the main growth engine driver over the past year, with confidence recovering swiftly after dipping in the aftermath of the EU referendum.
Expectations for growth over the next three months remained steady, with a balance of 17 per cent of firms positive about the future.
This positivity has been sustained despite the expected increase in inflation as input prices have soared. Sterling around 18 per cent less valuable since its pre-referendum high.
These imported inflationary pressures are set to raise prices faster than wages can keep up. Wages grew at 2.6 per cent year-on-year in the three months to December, but inflation is expected by some economists to rise above three per cent this year.
Rain Newton-Smith, CBI chief economist, said: “The economy is growing solidly, with consumer-facing sectors leading the way for now. And it’s encouraging that firm growth is expected to continue over the next three months.
“However, with inflation set to rise even further, this will dampen households’ spending power, and growth is likely to slow as the year progresses.”
The CBI’s own forecasts see UK annual GDP growth dipping to 1.5 per cent this year – a slowdown from 2016, and well below the Bank of England’s forecasts of two per cent growth in 2017.