BRC Questions Need For Rate Rise

With the Bank of England expected to raise interest rates today, the British Retail Consortium believes the widespread discounting seen in retail sectors from supermarkets to clothing and entertainment counters the argument that high consumer spending is in danger of fuelling inflation.

Kevin Hawkins, director general of the BRC said: "The figures for April deliver an unambiguous message for the MPC - there is no consumer-led inflationary pressure and no justification for a rise in interest rates. "Recent months have seen High Street prices driven by factors outside retailers' and the Bank of England's control, such as the weather and Government-led cost increases. April saw competition, especially in the grocery and fashion sectors, deliver a fall in the inflation rate. All the signals suggest we are likely to see that trend continuing.

"With increased levels of price competition set to deliver further restraint and downward pressure on prices, a rate rise now is both unnecessary and unhelpful." The BRC figures show that overall shop prices in April were slightly lower than in March, with the annual rate of inflation decline. The price of some staple items such as bread, are being pushed down by increased competition in the grocery sector as Tesco and Asda respond to Morrisons' expansion with price cuts campaigns.

Poor weather led to an increased focus on price promotion in clothing after Easter, especially womenswear, with sales of new spring and summer ranges off to a slow start. There was also Increased promotional activity on health and beauty products, as well as in the leisure goods sector, with multibuy promotions being increasingly used to attract shoppers.