British shoppers are increasingly switching to cheaper products, as rising inflation and stagnant wages takes its toll according to the Bank of England (BoE).
A new report from the bank found that UK firms reported goods rose at their highest rate in four years, while consumer spending growth continued to slow.
“Some contacts ascribed this to increased caution among consumers, and to consumers trading down to cheaper products or brands,” the BoE said.
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This comes after it slashed its forecasts last week, now expecting economic growth to slow to 1.7 per cent this year and 1.6 per cent in 2018.
Meanwhile wages are expected to rise by two per cent this year and three per cent in 2018.
The slowing growth in the first half of the year, now the worst seen since 2012, followed an unexpected performance in 2016 where the UK outperformed many leading economies.