The Week in Review – inflation falls, unemployment sends mixed signals and retail sales rally in May. The MPC minutes suggest more QE is on the way as the minutes of the June meeting are released. Download The Saturday Economist 23rd June

Good news on inflation as the headline rate CPI fell to 2.8% in May down from 3.1% in April. In other measures the RPI and RPIX also fell to 3.1% from 3.5%.

World trade is slowing with some respite to manufacturing and commodity prices. Oil prices Brent Crude $ basis fell 9% month on month, down 5% year on year, this helped UK prices. Brent Crude closed at $90 per barrel at the end of this week pushing prices lower into June and July no doubt.

Unemployment sends mixed messages as the claimant count increased slightly in May by 8,100 but the wider LFS count for the three months to April suggested unemployment fell. Confusing – well, a little but the figures are consistent with an economy stalling with no evident growth. Our forecasts for unemployment are little changed on the year.

Retail sales rallied in May with volumes up by 2.4% and values increased by 3.3%. Internet sales surged by almost 22%. On line food sales were up by 34%. “The future of the high street is not shopping” said Sebastian James this week, as the new CEO of Dixons continues to rationalise the retail base for multi channel delivery.

The minutes of the Monetary Policy Committee in June were also released this week. Base rates were on hold but more QE was narrowly avoided with a 5-4 vote against. Martin Weale won’t hold out for long, more QE may follow in July. Check out the details in the Saturday Briefing or Our discussion paper “What’s wrong with QE?“.

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