The surge in British Retail Consortium sales growth from an annual 0.6% in March to 6.3% in April can be explained by Easter timing effects. The last such timing discrepancy (i.e. Easter falling in April in the current year but in March in the prior year) occurred in 2006. Annual sales growth rose by 8.2 percentage points between March and April 2006 – much larger than this year's 5.7 pp increase.

While the April numbers are badly distorted, high-street spending has nevertheless proved resilient in recent months: the official retail sales volume index rose by 1.0% (not annualised) in the first quarter. Economists have suggested various reasons, including lower mortgage interest bills, the VAT reduction, falling energy prices and larger consumer cut-backs in other areas (e.g. car buying and eating out).

Monetary analysis offers an alternative explanation: the liquidity squeeze has been focused on companies rather than households so economic weakness has been driven by capital spending rather than consumption. As the chart shows, inflation-adjusted growth in "retail" M4 – i.e. currency in circulation and retail bank deposits – has picked up since late 2008 and tends to lead high-street sales.

While stable consumption is helpful, an economic recovery requires a reversal of recent cuts in corporate spending. Corporate money trends, however, remain weak: M4 holdings of private non-financial corporations fell by 1.7% in real terms (i.e. relative to the RPI) in the year to March. The MPC's expanded QE operation will, hopefully, boost aggregate M4 growth and thereby corporate liquidity in the months ahead.