Experts yesterday forecast more interest rate hikes despite a fall in inflation.
Further rate rises are likely even though official data showed the Consumer Price Index dipping 0.2 percentage points to 1.4% in July, economists said.
Although retailers sought to attract hard-pressed shoppers with discounts following last week's quarter point rate rise to 4.75%, analysts said they still expected prices to firm up in the medium term, meaning further rate rises were on the cards.
Higher mortgage interest bills sparked by June's quarter point interest rate rise to 4.5% helped to keep overall RPI inflation at 3%.
The figures followed a survey by the British Retail Consortium (BRC) and accountants KPMG showing that rising interest rates had begun to take their toll on high street sales.
Lower levels of consumer confidence coupled with wet weather combined to reduce retail sales growth to 4.3% in July, against the same time last year, from 5% in June.
The BRC said demand was sluggish and promotional price cutting was driving most growth.
Wednesday August 11, 2004
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