High street sales could drive base rate up
24 June 2008
Prolonged robustness in retail spending could be a driving force in encouraging the Bank of England to raise interest rates, it has been claimed.
Market analyst Capital Economics explains that strong high street sales in May make it more likely that the Bank's monetary policy committee will effect such a change.
UK Economist Vicky Redwood comments: "It obviously increases the chances that the next move in interest rates will be up."
"It would seem to suggest that the economy is proving pretty resilient in the face of the credit crunch," she explains.
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Her comments follow high street sales figures from the Office for National Statistics which observe a 3.5 per cent increase in consumer spending in May.
Ms Redwood adds that seasonal factors may have had an effect due to the particular weather conditions experienced during the month.
She notes that bad weather followed by a number of sunny days is often associated with increased sales of barbecues and clothing.
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