Things in the UK are looking good.  Inflation and unemployment are down, retail sales and GDP are up, and interest rates are stable despite the credit crunch affecting just about everyone.

Inflation was down in the July year, to 1.9% from 2.4% in June, putting it below the BoE’s target of 2.0%.  This was mainly due to a reduction in food prices although furniture and furnishings also experienced large price declines in July.  Lower petrol prices helped, but we can expect to see a reversal of this picture with oil prices up at US$80 a barrel as we go to press.

The UK’s CPI figure is above that of the European Union as a whole.  The provisional inflation rate for the EU 27 in June was 2.1%, compared with the UK rate of 2.4%.

Nevertheless, the fall in inflation coupled with the credit crunch causing jitters around the world was enough to stop the Bank of England (BoE) raising rates, instead keeping the bank rate at 5.75%.  Some quarters, most notably the British Chamber of Commerce, have called for the BoE to do much more – i.e. drop rates.

June GDP figures were solid, up 0.8% on the March quarter, and 3% on the June 2006 quarter.  Manufacturing, mining and quarrying led growth in the latest quarter, while construction’s contribution was up 3.7% over the year.

Wages have seen strong growth, up 0.4% in the quarter, and an impressive 3.6% on June 2006.  This has been accompanied by stable employment rates, more hours worked per week and more people in employment.  The unemployment rate was down marginally over the quarter (-0.1%) and the year (-0.2%), to 5.4%.  The jobseeker’s allowance claimant count was down again, to 852,900 in July, and has fallen over 11 consecutive months.

Meanwhile the trade deficit surged to £4.4bn in July, up from £3.9bn the month before.  This was due to a growing deficit on goods trade, as the surplus on services remained the same at £2.6bn.  Most of the increase in the deficit came from trade with non-EU members, with most of this the result of increased oil and consumer good imports.

Seasonally-adjusted retail sales volumes in the three months to July were up 1.1% on the quarter before and 4.0% on the same quarter last year.  Consumer good spending is not only booming in New Zealand, it seems.  Sales volume for household goods stores (which include furniture, electrical and DIY stores) increased by 4.9%, the highest growth for this sector since May 2001.