Bank of England chief warns against snap conclusions
Bank of England governor Mervyn King tonight ruled out a knee-jerk reaction to any signs of a slowdown in consumer spending.
Mr King said households only use about 40% of their budgets on the high street and retail sales figures were “not always a good guide” to spending habits.
His speech to the CBI was delivered just hours before the first official estimate of retail sales in December is published by the Office for National Statistics.
Economists assess the retail sales data for clues to future movements in interest rates, which are decided by the Bank’s Monetary Policy Committee.
It is widely expected that the retail sector has suffered a poor Christmas, with a British Retail Consortium survey finding it to be the worst for 10 years.
But Mr King cautioned against any snap conclusions, saying the “true meaning of the Christmas story” would not be revealed until Easter and possibly much later.
“The Monetary Policy Committee is more concerned to discern the meaning of the path of consumer spending over a longer time horizon,” he added.
Although the UK was “not so much a nation of shopkeepers as a nation that keeps shopping”, Mr King pointed out that the growth in consumer spending had slowed to a more sustainable over the past three years.
