Our changing view of debt
I’ve said here before that the Bank of England’s Monetary Policy Committee would be nuts to raise interest rates at the moment. The last week hasn’t done anything to change my mind. We already knew that real disposable incomes were falling and that wage rises were practically non-existent, something confirmed by Wednesday’s numbers showing that earnings are growing at an average rate of a mere 2.2%.
But on Monday we found that retail sales in Britain fell by 2% last month. That’s the biggest fall in 16 years. Then on Tuesday we found that there has been a small fall in the rate at which prices in Britain are rising. In February, UK Consumer Price Index inflation was 4.4% and Retail Price Index inflation 5.5%. In March they were 4% and 5.3%.
It seems that, as consumers have been cutting their spending, retailers, or the supermarkets at least, have been doing what the textbooks said they would..
• Read the full editor’s letter here: Our changing view of debt