Retail sales in the UK fell 0.8% in September as consumers increasingly feel the strain of falling real wages.
The squeeze created by consumer prices (CPI) rising must faster than average annual salaries was confirmed earlier this week when CPI hit 3%, while wage growth could only muster an annual 2.2%.
So, what do economists think Thursday's disappointing drop in retail sales, taken together with the inflation and wage data mean for the UK economy? Is a consumer-led slowdown inevitable?
And, more importantly, what do they think will be the response of officials - particularly those of the Bank of England's monetary policy committee? Can the committee successfully raise UK interest rates to bring down inflation - or does this, too, risk damaging growth?
The analysts say . . .
Capital Economics - Ruth Gregory: "Although September’s retail sales figures were far weaker than expected, growth still maintained a fairly reasonable pace in Q3 as a whole.
"Admittedly, retail sales volumes dropped by a monthly 0.8% in September, well below the consensus expectation for a 0.1% fall and pulling the annual rate down from 2.3% in August to 1.2%. But the monthly figures tend to be volatile and after a big rise in the previous two months, some fall-back had always looked likely.
"Meanwhile, spending still rose by a decent 0.6% over Q3 as a whole, suggesting that sales (which account for around a third of overall spending) will provide a small 0.05 percentage point or so boost to Q3 GDP growth."
ING - James Smith: "At -0.8%, the latest month-on-month fall in retail sales suggests that things haven’t got a whole lot better for consumer spending, after what was a particularly woeful second quarter.
"As the real wage squeeze persists, shoppers appear to be remaining cautious when it comes to non-essentials. Non-food retailers - which includes department stores - saw sales drop by 1.5% in September, while internet retailers continue to dominate the high street.
"With inflation likely to stay up around 3% for the next few months and wage growth set to hover just above 2% in the medium-term, the pressure on household budgets is unlikely to dissipate for at least a couple more quarters.
"It's also true that much of the spending we've seen throughout the last year has been fuelled by surging borrowing. Whilst much of that is confined to car financing, if consumers start to take a more cautious approach to unsecured lending more generally, that would keep a lid on any recovery in retail spending.
"Fragile consumer spending is a key reason why we think the Bank of England will take a cautious approach to raising rates. While we expect the Bank to exit 'emergency mode' with a November rate rise, we are yet to be fully convinced it will quickly follow up with a second hike over coming months."