Lost Property
01 / Jun / 2008
There were very few bits of data released last week to send us further into depression, and besides who needs data when you’ve got the media! The main focus last week was on the Nationwide House Price Survey. They reported a fall in house prices of 2.5% on the month, which was 4 times the figure that was expected by analysts. This followed a 0.9% decline in April. On an annual basis prices are now 4.4% lower than at this time last year. May’s fall was the sharpest decline since December 1992 when the UK was just emerging out of a recession. However, on a more positive note for retailers, retail sales fell less sharply in May than was expected despite prices rising at quickest rate since 1992.The Confederation of British Industry said it’s distributive trade survey reported sales balance rose to –14 in May from –26 in April.
So, what is going to happen to base rate on Thursday…absolutely nothing! Despite high inflation the Bank of England cannot afford to raise rates through the fear of sending us into a recession. David Blanchflower, Bank of England Policy Maker, confirmed these thoughts in a recent interview stating that despite higher inflation they are going to have to grin and bear it for a while. The committee’s forecast still is that inflation will be under control in the medium term without touching interest rates and their concerns at this moment in time is that they don’t want economic activity to drop dramatically.
This week we have only a few economic releases. Today we have the BOE Consumer Credit, Mortgage approvals and Mortgage Lending figures and then on Thursday it is the Bank of England base rate decision. So, unfortunately, the media will have no doom and gloom stories to focus on this week and no doubt will turn their attention back on to our beloved PM ‘Gorgeous Gordon’…but it isn’t his fault!