Sales boost may curb rate cut prospect

The methods used by retailers to bring shoppers back to the stores in January may reduce the prospects of mortgage interest rates being reduced, it has been suggested.

Official retail sales figures for January showed a 0.8 per cent increase, rather than the fall that analysts had been predicting.

This had partly come about because of significant cuts in retail sales, said Global Insight chief economist Howard Archer, who commented: "We strongly suspect that retail sales were lifted in January by increasingly pressurised and price-conscious shoppers being particularly keen to take advantage of genuine bargains in the sales."

A boost in sales may increase inflationary pressures in a way that may halt rate reductions, preventing hoped-for cuts in interest rates.

This may in turn make the self build option more cost-effective.

Earlier this week minutes for the Bank of England monetary policy committee's February meeting showed an eight to one vote for a 0.25 per cent reduction this month.



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