Rate hold fuels hopes of happy days on high street

THERE was a run of better news from the high street today, as improving retail sales and a brighter consumer confidence report provided the latest signs of hope for the economy.

- Michael Hunter

It came at the end of a potentially pivotal week. The Bank of England left interest rates on hold for the first time in almost two years yesterday, in a clear sign that policymakers think they are winning their fight against inflation.

Shoppers getting their wardrobes ready for autumn and snapping up back-to-school bargains helped August retail sales rise by 0.4% , led by a 2.3% rise in clothing, with food up 1.2%. World Cup football gave the figures a boost, with an England team in a final for the first time since 1966 helping to keep tills ringing after a spending washout a month earlier.

While the numbers were positive, they did not look hot enough to stir inflation. That is likely to have made welcome reading at the Bank, which ended its run of successive rate hikes at 14 by keeping the base cost of borrowing on hold at 5.25%.