3 hits at home and dark news from America as loan giants struggle

July 15th, 2008

BLOG Three different sets of figures have been released this week each revealing a different aspect of the turbulence facing the economy.

Figures released today have shown that inflation hit 3.8% in June, well above the Government’s target of 2% and an increase from 3.3% in May.

The figures, which came in above forecasts for the third month in a row, mean the Bank of England will now have less breathing space to cut interest rates. The Bank of England, which has already said inflation may top 4% this year, has to balance the need to control inflation with worries over growth.

The Bank is currently trying to balance growing evidence of an economic slowdown against the problem of rising inflation. Food and non-alcoholic drinks were the main factors fuelling the rise, with prices increasing by a record 2.1%, the ONS said.

Meanwhile, surging oil prices have driven up the cost of fuel with the average price of petrol increasing by 5.3p a litre.

Similarly gloomy news has come in from the high street. The British Retail Consortium has announced that like-for-like retail sales fell 0.4% compared with June 2007. Total sales, which include new stores, rose 2.1%.

Sales of food were up, but against the suppressed sales of a wet June in 2007. Food and drink was the only sector to show significant growth, the BRC said.

Clothing and footwear sales were the biggest losers, with furniture and homewares slipping further below the previous year’s levels.

Underlying High Street sales have now been lower than a year ago for three of the past four months.

Finally, the Royal Institute of Chartered Surveyors has announced that the number of people moving house is at its lowest level since surveyors started collecting records in 1978.

Rics said that demand from buyers remained low with many of them unable to get mortgages. However, there was one slight glimmer of hope since the number of surveyors reporting house price falls was not quite as high in June as it had been in May. People looking to take out personal loans have also found it more difficult.

All of this home grown gloom is complemented by the trouble of Frannie and Freddie in
America. If either firm were to fail, the consequences for the already fragile
US financial system would be disastrous as mortgage lending could virtually dry up. The knock on consequences for the
UK economy would be disastrous.

This entry was posted on Tuesday, July 15th, 2008 at 6:25 am and is filed under Personal Loans. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

3 hits at home and dark news from America as loan giants struggle

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