Chancellor dines on a perfect cocktail of statistics
Tuesday 15 April 1997
This encouraging start will be followed by other statistics tomorrow and Thursday likely to show a further big drop in the number of people claiming unemployment benefit, lower-than-forecast government borrowing last financial year, and unchanged headline inflation. The cocktail could scarcely have turned out better for the Chancellor so close to the election date.
"Inflation can keep falling this year," said Jonathan Loynes, UK economist at HSBC Markets. He predicted that only a small post-election increase in interest rates would be necessary.
But other City economists stuck to the view that inflationary pressures would pick up later this year because of the strength of the economy outside manufacturing. "There is growing evidence of overheating in the service sector," said Richard Iley at Hoare Govett.
The Conservatives are certainly in danger of having missed their target of underlying retail price inflation of less than 2.5 per cent by the end of the parliament, although the April figure will not be published until after the election. Economists expect retail price inflation to fall below the target rate later this year.
Yesterday's figures showed that inflation further back in the pipeline, in prices paid by manufacturers for materials and charged at the factory gate, had fallen to the lowest since the mid-1980s. The strength of the pound in recent months has contributed to the decline.
Manufacturers' output prices climbed by only 1 per cent in the year to March, while ''core'' prices, excluding food, drink, tobacco and petroleum, were only 0.5 per cent higher year on year.
Input prices declined 0.5 per cent during March, taking their annual rate of decline from minus 6.6 per cent to minus 7.6 per cent. This was the biggest annual rate of decline in the cost of materials since oil prices dived in the mid-1980s, and was also driven by cheaper oil. Food and metals prices increased sharply last month.
"There is very little inflation in the pipeline in manufacturing," said Gerard Lyons, chief economist at DKB. "The worry will be inflation in the services sector."
A separate survey from the British Retail Consortium showed the annual growth in the value of sales on the high street on a like-for-like basis slipping to 3.7 per cent in March, the lowest since last April.
Unadjusted sales growth declined from 7.9 per cent to 7.1 per cent.
"Whilst sales in general have held up reasonably well, some sectors may have been adversely affected by uncertainty associated with the election," said Andrew Higginson, chairman of the BRC's economic affairs committee.
He said inflation was low in the retail sector, with especially noticeable downward pressure on food prices.
Furniture sales fell victim to pre-election uncertainty, especially big- ticket items. But good weather and the early Easter holiday had led to especially buoyant DIY sales.
Britain First criticised for using actress's memory to draw attention to their 'hate-filled home page'
Emergency call 'started off dumb, but got pretty serious'
Greatest mystery about the hit BBC1 show is how it continues to be made at all, writes Grace Dent
"History is violent," says the US Army tank commander Don "Wardaddy" Collier
- 1 This 'woman calls police to order pizza' story isn't going where you're expecting
- 2 Axe wielding man shot dead after attacking four New York policemen on busy street
- 3 Watch what happened when food critics were unknowingly served McDonald's
- 4 Jimmy Carr's Oscar Pistorius joke goes a bit too far at the Q Awards
- 5 Ottawa shootings: Bruce MacKinnon's cartoon is the perfect tribute to soldier Nathan Cirillo
Renee Zellweger on plastic surgery rumours: 'I'm living a more fulfilling life and I'm thrilled that perhaps it shows'
FCKH8: YouTube reinstates provocative anti-sexism video showing young girls swearing
This 'woman calls police to order pizza' story isn't going where you're expecting
Axe wielding man shot dead after attacking four New York policemen on busy street
Jimmy Carr's Oscar Pistorius joke goes a bit too far at the Q Awards
Of course, teenage girls need role models – but not like beauty vlogger Zoella
Cameron is warned 'no possibility' of UK reducing immigration and that bid to bring in quota on migrant workers would be illegal
Support for EU membership 'at highest level since 1991' with most Brits wanting to stay 'in'
Thousands with degenerative conditions classified as 'fit to work in future' – despite no possibility of improvement
Residents should throw a street party and mix with immigrant neighbours, councils told
Attacks on 'Ukip Calypso' show how skewed people’s priorities are
iJobs Money & Business
£60000 per annum: Ashdown Group: Compensation and Benefits Manager - Compensat...
£30000 - £35000 Per Annum plus excellent benefits: Clearwater People Solutions...
£24000 - £28000 per annum + bonus & benefits: Ashdown Group: IT Business Syste...
£50000 - £90000 per annum + benefits: Ampersand Consulting LLP: Markit EDM (CA...