Damned statistics
The Office of National Statistics (ONS) yesterday released surprising retail figures for May that have been greeted with sector scepticism. If true, they would further justify the widely predicted rise in the Bank of England’s (BoE) base lending rate to quell rising inflation.
ONS said sales volumes grew by 3.5 percent, the largest jump since 1979, taking the annual increase in sales to a startling 8.1 percent. The Telegraph today reported incredulous snorts from BHS owner Sir Philip Green and Sainsbury CEO Justin King, who questioned ONS methodology.
In particular, the ONS analysis seems to have overlooked the weather-related factors highlighted in the findings of the British Retail Consortium, reported on 12 June.
Also today, the ONS revealed that the inflationary Public Sector deficit continues to grow. Public sector net borrowing, excluding “investment spending,” was £11 billion last month, £2.4 billion worse YOY and the second worst figure since monthly records began in 1993.
Chancellor Alastair Darling’s prediction of £43 billion net public sector borrowing for this financial year now appears to be optimistic. Revenues from record high oil prices are likely to be more than offset by declining VAT, corporation tax and stamp duty receipts.
Some believe that much “investment spending” has been a fudge to keep the budget deficit within government, and EU, guidelines. The expected rise in the BoE lending rate will push the government’s current account even further into the red.
