Further cut in rates tipped as retail sales dip
Thursday 20 June 1996
However, they predicted the Chancellor would deepen the rift opening up between him and the Bank of England if he does cut rates again soon. Minutes of Kenneth Clarke's May meeting with the Governor, Eddie George, released yesterday, reveal a difference of opinion, even though they agreed not to take any action then. According to the minutes, Mr George argued that: "There was little that monetary policy could do to offset the present, temporary, effect of weak overseas demand on manufacturing industry." Lower rates would simply risk stoking domestic demand with inflationary consequences.
However, Mr Clarke said below-trend growth and the complete absence of inflationary pressures made it worth considering reducing rates. City observers believe he acted against the Governor's advice in cutting a quarter point off base rates earlier this month.
Yesterday's retail sales figures provided further vindication for that move, following encouraging inflation figures last week. "It removes the last question mark over the Chancellor's judgement," Simon Briscoe, UK economist at Nikko Europe, said.
The volume of sales fell by 0.1 per cent in May, bringing their year- on-year growth rate a fraction lower to 2 per cent. It was the coldest May on record, which helped explain a 1.2 per cent drop in sales of clothing and footwear during the month. Economists said the weather probably reduced high street sales growth by 0.5 per cent.
Sales at food stores, which make up more than two-fifths of the total, were weak, too. They were down 0.2 per cent compared with the previous month and were only 0.4 per cent higher than a year earlier.
Sales by non-food retailers as a whole picked up, growing 4 per cent in the year to May against 3.2 per cent in the year to April. Household goods make up the strongest component, with sales volumes up nearly 10 per cent year on year.
"This is further evidence of an injection of demand, especially in the big-ticket area," said Leo Doyle, an economist at investment bank Kleinwort Benson. He predicted clothing sales would bounce back this month.
Anecdotal evidence continues to point to an upturn in spending. The latest figures from the John Lewis group speak of a "remarkable week's trade".
- 1 2015 General Election: Green party will not appear in TV debate alongside Ukip – says BBC
- 2 Kentucky gang rape: 15-year-old boy left in critical condition after sexual attack by group at party
- 3 Of course, teenage girls need role models – but not like beauty vlogger Zoella
- 4 North Korean officials 'publicly executed for watching South Korean soap operas'
- 5 Muslims, immigration and teenage pregnancy: British people are ignorant about almost everything
'Nasa Confirms Six Days of Darkness in December': No, they don't - it's a hoax
Canadian actor punched in face after 'Islamophobia' experiment goes wrong in wake of Ottawa shooting
Elizabeth Norment dead: House of Cards actress honoured by Kevin Spacey after she dies aged 61
Kentucky gang rape: 15-year-old boy left in critical condition after sexual attack by group at party
North Korean officials 'publicly executed for watching South Korean soap operas'
Pope Francis declares evolution and Big Bang theory are real and God is not 'a magician with a magic wand'
Huge surge in Ukip support after EU funding row, according to new poll
Ukip ‘exploiting grooming scandal’ to secure party’s first police chief
Nigel Farage: 'There’s nothing wrong with white people blacking up'
Muslims, immigration and teenage pregnancy: British people are ignorant about almost everything
Nigel Farage and Frankie Boyle clash over Andrew Lawrence's 'Mock the Week' criticism
iJobs Money & Business
£20000 - £23250 Per Annum pro rata: Clearwater People Solutions Ltd: Pro rata ...
£40 - 48k + Benefits: Guru Careers: We are seeking a Marketing Manager to join...
£45,000 - £65,000: Saxton Leigh: Our client is a well-known APAC Corporate and...
£60000 per annum: Ashdown Group: Compensation and Benefits Manager - Compensat...