Urgent action needed to ease pressure on household finances, warns IEA economist
Kristian Niemietz comments for The Telegraph
Commenting on the retail sales data, published by the ONS, Julian Jessop, Economics Fellow at free market think tank the Institute of Economic Affairs, said:
“The slump in retail sales in March and the further fall in the GfK measure of consumer confidence in April underline the risks to the UK economy from the global inflation shock.
“The weakness in sales in the shops, and especially online, may partly reflect a shift back to spending in pubs, restaurants and other leisure activities. Consumer confidence can also be fickle and is not always a reliable predictor of actual spending.
“Nonetheless, the cost of living crisis is clearly biting.
“The retail sales deflator (a gauge of shop price inflation) jumped by 9.7 per cent in March compared to a year earlier. Even excluding petrol and diesel, it rose by 7.6 per cent.
“The retail sales deflator is not a better measure of overall inflation than the CPI or the RPI, which cover a wider range of goods and services. But it does more accurately reflect what households are experiencing in the shops on a day to day basis.
“The government urgently needs to do more to ease the pressure on household finances.
“In the longer term this is best done by supply-side reforms, such as removing barriers to housebuilding, ensuring that labour markets can work properly, and by cutting and simplifying taxes.
“But in the short term, the government should be considering a range of additional steps to protect the most vulnerable from higher prices, on top of the actions already taken.
“Options here include bringing forward the next uprating of benefits, so that they are increased in line with the current rates of inflation, and removing some of the policy costs from energy bills.”
ENDS Notes to editors Contact: Emily Carver, Head of Media, 07715 942 731 IEA spokespeople are available for interview and further comment.