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Economists were shocked yesterday when it was revealed that despite gloomy economic forecasts and signs that growth is slowing rapidly, retail figures for last month recorded a record growth of 3.5%. This may not sound much but is the strongest monthly growth since 1986.

Some analysts have even questioned the figures. ‘The figures are on a completely different plane compared to what markets were expecting. Some questions were raised over the accuracy of the figures because they were so out of kilter when compared with other reports.’

Even the Bank of England has questioned the statistical office reports, and after last month’s retail sales figures release said that it was giving more weight to other indicators of High Street activity, which were showing more of a slowdown.

Even bearing this in mind May’s retail figures make for surprising reading. Food sales rose 3.3% as people bought salads and stocked up for barbecues, while clothing sales jumped 9.2% as shoppers sought out new summer outfits. This years pleasant weather compared with a year ago has been sighted as one reason for this.

Inflation, it seems, has become policymakers’ biggest worry and not the state of the UK economy. One analyst said, ‘today’s very strong set of retail sales numbers suggests that, despite all the doom and gloom, the UK consumer continues to shop, Unfortunately this ‘shop till we drop’ attitude will sow the seeds of its own demise. The risk of rate rises followed by a recession has just gone up.’

The fear is that even if the surge in consumer spending can be attributed to a spell of warm weather in May, high food and fuel prices will force the Bank of England to raise interest rates at a time when the UK economy is already slowing.

Household energy bills could increase by as much as 40% this winter. That could mean households paying £400 more a year on average for their gas and electricity. An increase on that scale would be far more than analysts have predicted in recent months.

So far from being a beacon of hope it would seem that the retail figures point to the return of inflation. Unfortunately, as the Bank of England fights that inflation it could tip us into a recession in order to avoid a damaging period of stagflation. The Monetary Policy Committee has some tough decisions ahead.

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The former head of the Office of Fair Trading has released a new report claiming that estate agents, letting agents and managing agents, who handle residential property, should be subjected to much more formal regulation.

Anyone can set up in business as an estate agent, but Sir Bryan Carsberg says a basic qualification is needed. He also suggests that Home Information Packs (Hips) should become voluntary.

Sir Bryan’s report, which contains 30 recommendations to improve the way the residential property market works, was commissioned last year by a number of bodies.

They included the Royal Institution of Chartered Surveyors (Rics), the National Association of Estate Agents (NAEA) and the Association of Residential Letting Agents (Arla).

The report’s aim was to look at ways to improve regulation, standards and methods of redress for people buying or renting property. Rics welcomed the report as the basis for “major reform” of the industry. Many people are now chooosing to work on their own homes instead of moving and they are using home improvement loans in the UK to facilitate this.

The biggest change in England and Wales to the sale of residential property has been the introduction of Home Information Packs. These were originally designed to provide much for more information upfront to potential house buyers and to cut short the often frustrating process of buying a home.

But despite saying that more information for customers is one of his key aims, Sir Bryan recommends that Hips should become purely voluntary. And he said that they should not, as was once intended, include a survey of the property that is being sold.

“It would not be helpful to introduce new measures through legislation or regulation to require the production of surveys, home condition reports or valuation reports at particular times,” he said.

“I think that the markets for estate agencies, letting agencies and managing agencies are not working well because clients are not well informed about the qualifications of different agents and about what to expect from them in the way of service,” he added.