Even the last interest rate rise does not seem to have significantly affected consumer spending.
According to latest figures the underlying growth in retail sales remains strong, with just a slight decrease in monthly sales in April.
The unadjusted figures for retail sales for the three months to April was 5.4% higher than for the same period last year, which is the highest growth since July 2004.
Many economists are predicting a further rise in interest rates will be needed in the coming months to cool the housing market and in turn remove the support for consumer spending.
It is not clear if a quarter percent rise will be sufficient to take the steam out of the housing market, with many predicting the need for a further rise to around 6% by the end of the year.
There are many factors which are affecting UK interest rates and inflation. Oil prices are still around 70$ a barrel which is around 30% higher than the start of the year.
Then there is the rising cost of food with food price inflation at its highest level in six years at 6%.
One of the major factors keeping current inflation rates low is the reduction in energy prices but will this be enough to hold back inflation in the coming months, only time will tell, but for what it is worth I would say not.
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