A near-perfect storm

9 January 2008 By Ian Campbell

If it s not a perfect storm, it comes close. UK Inflation is up, and set to rise further. Meanwhile, house prices have stopped rising slicing away at consumers reserves. Add in the credit crunch, which is making loans scarce. Expect more bad news from retailers.

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Marks & Spencer said on January 9 that revenue fell by 2.2% in stores open for at least a year in the quarter which ended on December 29. This was the company's first drop in sales in more than two years.

Tesco said on January 15 that sales at UK stores open at least a year rose by 3.1% in the six weeks to January 5th. The rise was below City forecasts.

The Royal Institution of Chartered Surveyors found in December that a balance of 49.1% of its surveyors reported that house prices fell in December. This was the worst result since November 1992.

The UK's Office for National Statistics reported on January 15 that CPI inflation held at 2.1% in January, slightly above the Bank of England's 2% target. Food prices rose by 5.9% from a year earlier. On January 14 factory gate inflation rose to 5%, a 16year high. Rising energy prices are expected to increase some utility bills sharply in coming months.

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