New spending data defies credit crunch

News Article - 20 June 2008
Category: Business

The latest retail spending figures for the UK indicate that the current economic downturn has failed to dampen consumer activity.

Official data reveals that sales leapt in May 2008 by 3.5 per cent, raising fresh concerns that the Bank of England will be forced to increase interest rates over the coming months.

Analysts were taken aback by the strong retail statistics, as the effects of the global credit squeeze were expected to affect markets in May.

Sales grew last month at the strongest level since the measurement was introduced in January 1986, defying the economic downturn and evidence of weakening consumer confidence which had led experts to forecast a month-on-month fall.

Bank of England governor Mervyn King warned in a speech to City bankers this week that consumers would have to get used to higher fuel and food costs and Britain was facing difficult economic times ahead.

Economists are now forecasting an increase in interest rates to curb inflationary pressures, as both consumer spending and oil prices show no signs of slowing.

Accounts software can help companies to monitor and manage their finances during difficult economic periods.

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