Inflation in March fell by 0.4 per cent to 4 per cent – although still double the Bank of England’s target rate and ahead of wage settlements – which was attributed to a fall in food prices of 1.4 per cent and a slowing down of the rate of price increases for other essentials such as gas and petrol.
The lower inflation figure was seen as taking away the principal argument by so-called interest rate hawks on the Bank of England’s Monetary Policy committee that interest rates should be increased. Advocates of a rate hike disregard arguments that price rises have been imported via higher commodity costs and VAT increases – not by excessive consumer spending or property inflation.
he Retail Price Index fell to 5.3 per cent in March, down from the previous 5.5 per cent in February. The Office of National Statistics said that the Government’s added tax rate contributed to hiking inflation by 0.76 per cent of a point.
Confirmation of depressed retail sales came from the British Retail Consortium Retail which said sales dropped by a record 1.9 per cent year on year in March – the biggest drop in 16 years – due to inflation levels and squeezed household budgets The Office for National Statistics said the recovery remains “uncertain” as lower spending patterns have persisted since January, consumer confidence hit a record low in February and consumer-credit growth remains sluggish, house prices are declining and high inflation erodes disposable incomes.
The Office for Budget Responsibility recently slashed forecast for consumption growth to 0.6 per cent, leading it to cut its forecast for 2011 gross-domestic-product growth to 1.7 per cent from 2.1 per cent, although the National Institute for Economic and Social Research expects consumption to fall 0.1 per cent in 2011 with growth at 1.5 per cent.
On a more positive note, Britain’s jobless rate fell in the three months to February and employment rose. The Office for National Statistics said the number of people without a job on the broad International Labour Organisation measure fell by 17,000 in the three months to February to 2.480 million, reducing the jobless rate to 7.8 per cent, below forecasts of 8 percent. It was the first fall in both the actual number out of work and rate of unemployment since last September.
The number of people in employment also rose by 143,000 in the three months to February – driven by the biggest rise in the number of people in full-time employment since May 2007. The number of 16 to 24-year-olds out of work rose to 963,000 in the three months to February, up 0.1 per cent from the three months to November 2010. Youth unemployment is now 20.4 per cent. In March, 4,400 men came off jobless benefits and 5,100 women joined the register – a near 15-year high. The number of female claimants has now increased for nine months in a row and fallen for men for 14 consecutive months.
