It’s another sign that the worst of the economic crisis is over. It may seem hard to believe given the prevailing gloom, but things are beginning to look up.
Just ask clothing and homeware retail chain Next plc. While there has been carnage on our high streets, with everything from budget chain Wilko to clothing empire Ted Baker going bust, Next stands strong.
It’s often seen as a bellwether of how British consumers are feeling, because when they’ve got cash in their pockets, they’ll spend more on some decent clobber.
And that’s what’s happening.
Yesterday, Next shares jump 6.67 percent, after a blistering set of full-year results. It reported a “shift back to investment dressing”, as shoppers spend more on better quality fashion.
This followed Wednesday terrific news that inflation in February fell back to 3.4 percent, and the trend is expected to continue.
Staples like bread and milk have stopped rising in price, and in some cases are now falling.
This will put more money back in shoppers’ pockets.
On April 1, Ofgem’s energy price cap will fall by 12 percent, knocking £238 a year off typical household bills.
It’s not all good news, as council tax will rise by the same on the same day, but the cost-of-living crisis is drawing to a close and soon, people will notice.
Especially those who have benefited from chancellor Jeremy Hunt’s twin National Insurance cuts.
There’s only one sticking point. The usual one.
Yesterday, the Bank of England missed its cue – again.
Thursday’s meeting of its rate-setting monetary policy committee (MPC) would have been a brilliant moment to surprise us all, and treat the nation to a first interest rate cut.
That would have been the right thing to do, so of course the BoE didn’t do it. I suspect that may be written into its mission statement.
Having misread inflationary signals on the way up, the MPC let by governor Andrew Bailey seems equally determined to miss them on the way down, too.
So the nation is stuck with base rates of 5.25 percent at least until the next MPC meeting, which is a staggering seven weeks away on May 9.
That means mortgage rates and business borrowing costs will remain unnecessarily high, dragging out the economic pain.
Surely it could have granted us a small but symbolic 0.25 percent cut. That wouldn’t definitely have woken everybody up.
Yet only one member of the MPC’s nine members voted for a cut.
Markets aren’t expecting the BoE to cut rates in May either. We may be looking at June. Or possibly later.
Yet inflation could fall back to the BoE’s target of two percent as early as next month. How low does it have to go before the BoE acts?
READ MORE: ‘Utterly stupid’ BoE must cut interest rates now or 500,000 firms will collapse
The BoE seems to determined to carry on battling a threat that has already passed, and it doesn’t seem to care how much damage it inflicts on the rest of us in the process.
At least mortgage rates fell slightly after yesterday’s decision, as markets sensed some softening in the MPC’s position.
Even dozy Bailey has noticed that inflation “moving in the right direction”, and suggested it was “reasonable” to expect two or three rate cuts this year.
If inflation does fall back to target, we should expect a lot more than that.
Just a few words from Bailey put a rocket under the stock market. Imagined what would happen if he actually backed it with action.
Bailey is acting as a one-man brake on the recovery we urgently need. Someone has to wake him up.