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SPENDING POWER FALL HITS CONSUMERS

More evidence has emerged that increased inflationary pressures on household budgets could be contributing to UK motorcycle sales decline.

Inflation, as defined by the Office for National Statistics (ONS) consumer price index, climbed to an annual rate of 2.7% in April — up from 2.3% in March. Prices are now rising at their fastest since September 2013 and outpacing pay increases. Wages are growing at 2% year-on-year, therefore real spending power is eroded accordingly.

Main driver for price rises is sterling’s decline in value since the EU referendum last year. Although there has been a slight rebound in recent weeks, with the pound improving to just under $1.30, it is still about 14% lower than pre-referendum levels.

The ONS producer price index, which measures cost of goods at the factory gate, rose by 3.6% during April, the same rate as in March. Higher factory gate prices are generally passed on to consumers, thereby further stoking inflation.

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