Chancellor dines on a perfect cocktail of statistics

A week of key economic statistics kicked off yesterday with figures sure to please Kenneth Clarke, with news that inflation at the factory gate fell last month to its lowest for more than a decade. Separate survey results showed that high street sales grew at a slower pace in March.

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retail price inflation of less than 2.5 per cent by the end of the parliament, although the April figure will not be published until after the election.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.

News
people
Sport
FootballGerman sparks three goals in four minutes at favourite No 10 role
News
Rumer was diagnosed with bipolarity, attention deficit hyperactivity disorder and post-traumatic stress disorder: 'I was convinced it was a misdiagnosis'
peopleHer debut album caused her post-traumatic stress - how will she cope as she releases her third record?
Sport
A long jumper competes in the 80-to-84-year-old age division at the 2007 World Masters Championships
athletics
PROMOTED VIDEO
Sport
Radamel Falcao was forced to withdraw from the World Cup after undergoing surgery
premier leagueExclusive: Reds have agreement with Monaco
Arts and Entertainment
'New Tricks' star Dennis Waterman is departing from the show after he completes filming on two more episodes
tvHe is only remaining member of original cast
Sport
Lewis Hamilton will start the Singapore Grand Prix from pole, with Nico Rosberg second and Daniel Ricciardo third
F1... for floodlit Singapore Grand Prix
Life and Style
Walking tall: unlike some, Donatella Versace showed a strong and vibrant collection
fashionAlexander Fury on the staid Italian clothing industry
Arts and Entertainment
Gregory Porter learnt about his father’s voice at his funeral
music
Arts and Entertainment
tvHighs and lows of the cast's careers since 2004
Life and Style
Children at the Leytonstone branch of the Homeless Children's Aid and Adoption Society tuck into their harvest festival gifts, in October 1936
food + drinkThe harvest festival is back, but forget cans of tuna and packets of instant mash
New Articles
i100... she's just started school
News
news
News
ebooksAn unforgettable anthology of contemporary reportage
New Articles
i100
Life and Style
Couples have been having sex less in 2014, according to a new survey
life
Arts and Entertainment
musicBiographer Hunter Davies has collected nearly a hundred original manuscripts
New Articles
i100... despite rising prices
Voices
Holly's review of Peterborough's Pizza Express quickly went viral on social media
voices
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Senior BA - Motor and Home Insurance

£400 - £450 Per Day: Clearwater People Solutions Ltd: **URGENT CONTRACT ROLE**...

Market Risk & Control Manager

Up to £100k or £450p/d: Saxton Leigh: My client is a leading commodities tradi...

SQL Developer - Watford/NW London - £320 - £330 p/d - 6 months

£320 - £330 per day: Ashdown Group: The Ashdown Group have been engaged by a l...

Head of Audit

To £75,000 + Pension + Benefits + Bonus: Saxton Leigh: My client is looking f...

Day In a Page

Scottish referendum: The Yes vote was the love that dared speak its name, but it was not to be

Despite the result, this is the end of the status quo

Boyd Tonkin on the fall-out from the Scottish referendum
Manolo Blahnik: The high priest of heels talks flats, Englishness, and why he loves Mary Beard

Manolo Blahnik: Flats, Englishness, and Mary Beard

The shoe designer who has been dubbed 'the patron saint of the stiletto'
The Beatles biographer reveals exclusive original manuscripts of some of the best pop songs ever written

Scrambled eggs and LSD

Behind The Beatles' lyrics - thanks to Hunter Davis's original manuscript copies
'Normcore' fashion: Blending in is the new standing out in latest catwalk non-trend

'Normcore': Blending in is the new standing out

Just when fashion was in grave danger of running out of trends, it only went and invented the non-trend. Rebecca Gonsalves investigates
Dance’s new leading ladies fight back: How female vocalists are now writing their own hits

New leading ladies of dance fight back

How female vocalists are now writing their own hits
Mystery of the Ground Zero wedding photo

A shot in the dark

Mystery of the wedding photo from Ground Zero
His life, the universe and everything

His life, the universe and everything

New biography sheds light on comic genius of Douglas Adams
Save us from small screen superheroes

Save us from small screen superheroes

Shows like Agents of S.H.I.E.L.D are little more than marketing tools
Reach for the skies

Reach for the skies

From pools to football pitches, rooftop living is looking up
These are the 12 best hotel spas in the UK

12 best hotel spas in the UK

Some hotels go all out on facilities; others stand out for the sheer quality of treatments
These Iranian-controlled Shia militias used to specialise in killing American soldiers. Now they are fighting Isis, backed up by US airstrikes

Widespread fear of Isis is producing strange bedfellows

Iranian-controlled Shia militias that used to kill American soldiers are now fighting Isis, helped by US airstrikes
Topshop goes part Athena poster, part last spring Prada

Topshop goes part Athena poster, part last spring Prada

Shoppers don't come to Topshop for the unique
How to make a Lego masterpiece

How to make a Lego masterpiece

Toy breaks out of the nursery and heads for the gallery
Meet the ‘Endies’ – city dwellers who are too poor to have fun

Meet the ‘Endies’ – city dwellers who are too poor to have fun

Urbanites are cursed with an acronym pointing to Employed but No Disposable Income or Savings
Paisley’s decision to make peace with IRA enemies might remind the Arabs of Sadat

Ian Paisley’s decision to make peace with his IRA enemies

His Save Ulster from Sodomy campaign would surely have been supported by many a Sunni imam