Forecasting more inflation
On March 31 this Blog claimed that the "retail boom is well and truly over". And it is -- with a vengeance.
Retail sales in March were down 3.5% on a like-for-like basis and almost 2% down overall. Both figures are the worst in recent memory. The later Easter is a factor but not the most important one.
The retail slump is almost certainly the result of the current vicious squeeze in living standards (see past Blogs). Since that is set to continue for the foreseeable future retail sales are likely to be in doldrums for some considerable time.
Two brighter points, kinda. Inflation surprisingly dipped in March: the government's favourite measure the CPI by 0.4% (to 4% -- still double the official target) and the public's more relevant measure the RPI by 0.2% (still leaving it over 5%).
The fall is largely due to food prices coming off recent highs. But the inflation trend is still up and there is still every chance that the CPI will reach 5% before the year is out. City forecasters, who were caught short by the March fall, still see more inflation to come.
The other bright spot is unqualified good news: exports are up 15% year on year. With British consumers going on strike the economy badly needs an export-led recovery or there will be no recovery at all. Too soon to talk of anything like a German-style export boom.
But at least exports are moving in the right direction.