Halifax data met with caution

The first tentative signs yesterday that consumer spending was not after all getting out of control were not expected to carry much weight with the Bank of England's Monetary Policy Committee when it meets this week.

Analysts remained divided about whether or not the Bank will announce the fourth increase in the cost of borrowing in four months after its meeting ends on Thursday.

Halifax reported yesterday that house prices had remained almost flat last month, climbing only 0.1 per cent. The annual rate of increase slowed to 6.4 from 7.1 per cent in June.

Halifax said that the housing recovery would continue, describing the market as "well supported". But its downbeat figures contrasted with Nationwide's alternative measure. On Friday Nationwide said its house price index had jumped 1.8 per cent in July, with the annual rate picking up to 12.2 per cent.

A spokeswoman for Halifax claimed its rival's figures reflected a bias towards London and the South-east. But Nationwide said its figures were weighted to adjust for regional differences and were also more reliable because based on a bigger number of housing transactions than the Halifax measure.

With mixed signals on the housing market, a separate indicator yesterday pointed to slower growth in cash in circulation last month. The growth in the narrow money measure M0, of which cash forms the biggest component, eased to 5.9 from 6.2 per cent in June.

This was its slowest annual growth rate for 18 months. But economists were wary about drawing any conclusions for high street spending, as retail sales growth has picked up during this year even as narrow money growth has slowed.

Adam Cole, UK economist at James Capel, said consumers were spending on big ticket items which were unlikely to be paid for in cash. Analysts also pointed out that all other recent indicators of consumer spending had indicated booming demand. Yesterday's figures were not enough to change the minds of the Bank's experts if they wanted to raise interest rates.

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