Retail Consortium banking on interest cut to boost economy |
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Fri, 10 Jun 2005 10:40
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The Bank of England has been summoned by the retail industry to slash the interest rates to inject some energy into the economy, which is shrouded in a persistent downturn for quite some time now.
Retailers at the British Retail Consortium reported that same-store sales in May had plummeted 2.4 percent as against the same time last year and the property market had also recorded a slump in growth, so much so that housing growth recorded last month in May, hit a five-year low, at 5.7% and was in sharp contrast with 22.1% recorded previous July.
Kevin Hawkins, director general of the retail consortium said, “While some analysts still claim that the continuing weakness in retail sales is only a blip, these figures should remove any lingering doubt that we are now in a consumer-led recession. We urge the Monetary Policy Committee to reduce interest rates at this week's meeting.”
While many experts believed that the Bank of England would decide to maintain the 4.75 % rate during its meeting on Thursday, Investec economist, Philip Shaw hinted that the Bank could be compelled to wield the axe if the property market refused to recuperate and if no recovery was recorded in high street spending or production either.
| The consortium statistics displayed how consumers had tightened their belts and preferred to stay at a distance from the purchase of products like washing machines and clothes. In fact, reports from research firm, Verdict predict that as per the present trend, retail sales in 2005 could rank amongst the most sluggish in about 40 years.
High Street retailers have been registering a decrease in sales ever since last year, like Woolworths Group PLC, which stated that its like-for-like sales had fallen 4.4 percent in the 1 ½ years ending June 4.
Chairman of the departmental store chain, Gerald Corbett informed, “Current trading has remained difficult and the outlook for consumer spending on the high street remains poor.”
Meanwhile, numerous shops are offering discounts along with lucrative deals in a bid to draw more customers to their stores. Nevertheless, retail analysis’s head at KPMG, Helen Dickinson, warned that such marketing and endorsement strategies could backfire and eventually harm retailers. He was quoted as saying, “The detrimental impact on margins will only become apparent as the year progresses.”
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