THERE was visible relief among the members of the Bank of England's Monetary Policy Committee who were paraded before the House of Commons Treasury Select Committee yesterday.

The latest retail sales figures provided the clearest indication yet that consumer demand is slowing down after the hectic pace of last summer when the proceeds of building society flotations were thrown around like confetti.

Since the General Election last May, interest rates have been raised five times taking base rates to 7.25%.

They have been held at this level since November, although the Monetary Policy Committee has spent much of the period since locked in dispute and even deadlocked over whether they should go higher still.

Eddie George, the Governor of the Bank, has stood out against further increases and on two occasions has been forced to use his casting vote on the committee. But it now looks as if he is going to be proved right in the stance he has taken.

Retail sales grew by just 0.1% in April (after 0.2% in March), and more significantly they increased by just 0.2% in the latest three months.

The figures may have been affected by the poor weather at Easter, and the comparison with the previous three months could have been distorted by the upsurge in spending in the January sales.

Even allowing for these factors sales growth is much slower than last year, when it was growing in excess of 5% per annum.

The pity is that this evidence of a slower pace of growth has not coincided with better news on the inflation.

The April retail price data were truly awful, with the headline rate hitting 4% and the underlying rate, which excludes mortgage interest payments, 3%.

Much of the recent deterioration in the figures is due to own-goals by the Government over mortgage interest tax relief, petrol duty, and council taxes.

But as past mortgage increases work their way out of the annual calculation and the economy slows down, inflation is expected to fall to its 2.5% target. But the concern over the contemporary figures and their possible bearing on average earnings growth is likely to delay the first cut in rates till much later in the year, perhaps even next year.