Weaker sales could mean rates stay the same

Figures from the British Retail Consortium (BRC) showing that retail sales growth slowed in June could mean that the Bank of England opts to leave interest rates at 5.75 per cent for the short term at least, it has been suggested.

While advising that the wet weather may have been partially responsible for the slump, the BRC nonetheless suggested that a cumulative 1.25 per cent rise in the base rate since last August was now having the desired effect.

Sales rose by 3.1 per cent last month, year-on-year figures show, in comparison to a rise of 5.1 per cent recorded in June.

"The combination of a tightening squeeze on consumer spending and heavy rainfall reduced sales growth to a level not seen since last November," commented BRC director general Kevin Hawkins.

Global Insight economist Howard Archer suggested that the figures would mean that the Bank of England would again freeze rates at 5.75 per cent come September.


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