A Mixed Bag!
23 / Nov / 2008
Last week produced a mixed bag of data. On the positive front UK mortgage lending rose by 7% from the month before. Despite the upturn the figure was still 44% lower than the same time last year and the outlook is still continuing to look gloomy even with the potential for more cuts in base rate. Another positive was retail sales, which fell less than expected in October. Retail sales fell by just 0.1% last month but were 1.9% higher compared to last year. Analysts had predicted a fall of 0.9% on the month and an increase of 1.4% year on year. Although these figures look reassuring, remember they relate to volumes not prices and in current market conditions the high street is full of heavily discounted stock as retailers try and lure us into their stores. Probably the most important news last week was the inflation data, had the Bank of England got their predictions right? As they had forecast, indeed the Consumer Price Index has begun to fall and last month it was by more than expected. CPI dropped to 4.5% in October from 5.2% the previous month taking it to its lowest level since July, mainly due to the decrease in fuel costs. It more than justified the unanimous decision by the Bank of England Policy makers to cut 1.5% off the base rate last month. They voted 9-0 for the cut and this will reinforce the expectations of further cuts. The aim of the game is to get people spending again and bring confidence back. Failure to do this could result in us living in a deflationary environment and a weak currency, not good for any economy!
There are no significant data releases this week except for today’s Nationwide house price survey. This will show no surprises and should continue to show a downward trend for house prices.