Ian McCafferty High Quotations

Only two of the 10 industry groups surveyed this month - chemicals and metal products - expect prices to rise in their sector over the coming three months. Cost pressures from high oil and transportation prices will only serve to depress profits further,

The slightly less negative recent news from the housing and retail sectors contrasts with increasing pressures on manufacturers from the high cost of fuel and materials.

The sustained high level of oil and sharply increased gas prices have driven up energy and raw material costs and manufacturers are continuing to respond by cutting employment to curb the wage bill and boosting investment in efficiency-improving measures.

The Bank has chosen to follow a steady course. This is particularly understandable given current mixed economic signals. The slightly less negative recent news from the housing and retail sectors contrasts with increasing pressures on manufacturers from the high cost of fuel and materials. The MPC should stay alert to further weaknesses in the economy and must remain on standby to cut rates over the coming months.

Christmas, in retailing terms, is coming later and later each year as consumers play chicken with the high street and delay their spending in the expectation of late price cuts as the big day draws nearer.