Howard Archer December Quotations

If this is confirmed, it will reinforce our suspicion that the December performance was inflated by many consumers opening their wallets to treat their families and themselves at Christmas having held back their spending over much of 2005.

While the CBI survey indicated a marked softening in consumer spending following the relatively strong December performance, it nevertheless indicated a significantly stronger performance than that seen overall in recent months.

With consumer price inflation below the 2% target level in both December and January and clearly below the levels forecast by the Bank of England in their November quarterly inflation report, a near-term interest rate cut suddenly looks a very real possibility again.

With one member of the MPC voting for an interest rate cut in December and Bank of England chief economist, Charlie Bean, recently making some dovish comments, the odds of an interest rate cut early in 2006 are rising.

December survey evidence showing robust service sector activity, stronger retail sales and firmer house prices has temporarily at least alleviated some concern over the economy's softness and eased pressure on the MPC for an imminent cut in interest rates.

The clear improvement in economic sentiment in December boosts hopes that domestic demand will increasingly kick in over the coming months to support growth.