Slowing house prices and retail sales cast doubts on rate rise

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The Independent Online

House prices fell in September while high street spending and factory goods prices have slowed, according to the first batch of figures released since the Bank of England raised interest rates last week.

The price of the average home in the UK dropped by 0.4 per cent, or £600, to £158,408 in September, said the Office of the Deputy Prime Minister (ODPM). But this was in sharp contrast to the estimates by Nationwide and Halifax that prices rose more than 1 per cent.

The figures from the ODPM echoed a survey of estate agents' asking prices by Rightmove, a property website, that said prices dropped 0.6 per cent in September. It said its figures were not seasonally adjusted and the fall might simply reflect a seasonal slowdown in the market.

The annual rate slowed to 10.9 per cent, the lowest since the series was started in February last year and down from 22 per centseven months ago.

This was in line with figures from the Land Registry showing prices rose 10.6 per cent in the year to September.

And retail sales grew by just 0.8 per cent in October, the British Retail Consortium said. This was the lowest rate of growth in more than four years, apart from March this year when they fell during the Iraq war. The BRC said it was too early to tell whether this was a typical pre-Christmas pause or a sign that the consumer economy was "running out of steam".

Bill Moyes, the BRC's director general, said: "Either way, it is strong evidence that the Government and the Bank of England should not press consumers too hard." Almost every sector along the high street suffered a poor month with food and drink and electrical and electronics goods performing especially badly.

There was little sign of inflation in the manufacturing sector with prices of goods leaving the factory gate rising just 0.1 per cent for the second month in a row in October.

Input prices surged 1.6 per cent on the month, mainly due to soaring oil prices.

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