Bank wakes up to inflation and growth threats – MoneyWeek

Atfirstglance,thedoveswilllovethelatestBankofEnglandinflationreport。

Theriseinthecostofliving,asmeasuredbytheRetailPriceIndex(excludingmortgagepayments),isnowhigherthantheBanks5%baserate;andat4。

4%,theConsumerPriceIndex–theBankskeyinflationguage–maybeheadingthesameway。

Butdontfret,saidtheBank:withintwoyears,CPIshoulddropbacktobelowthe2%target,evenifinterestratesareleftonholdfornow。

Thiswasgenerallymoredovishthanmighthavebeenexpected,saidJonathanLoynesofCapitalEconomics,asthemedium-terminflationprofilehasbeenreviseddownquitesharply,suggestingthattheMonetaryPolicyCommitteeisgraduallybecomingmoreconcernedabouttheoutlookfortheeconomy。

Theoutlookforgrowthisgrim

Andlittlewonder。

Unemploymenthasjustclimbedbythemostinalmost16years,takingtheheadlinerateto5。

4%。

Theweaknessinthelabourmarketwillweighonconsumerspending,saidJeavonLolayatLloydsTSB。

AlreadyUKretailsalesaregrowingjust1。

7%year-on-year,saidtheBritishRetailConsortiumthisweek,witheverysectorexceptfoodrecordingfalls,saidBRCdirectorgeneralStephenRobertson。

Andthehousingmarketcontinuestodeteriorate。

TheRICSpropertysurveyforJulyshowedthatthenumberofestateagentsseeingpricefallsexceededthosereportinggainsby84%。

Thelackofmortgagefinancehasbroughtthehousingmarkettoavirtualstandstill,accordingtoRICSsIanPerry。

Repossessionsareup48%onlastyear,saidtheCML,thehighestfiguresincethefirsthalfof1996。

ThatweighedonlenderssuchasBritanniaBuildingSociety,whereextrabadloanprovisionscausedfirst-halfprofitstofall36%。