monthly growth in gdp and market sector output according to the national accounts – expressed relative to our one - month ahead forecasts – cumulated since november 2023, when i joined the mpc. having experienced upside surprises in economic activity for around half a year, we have now seen a string of downside surprises for about the same length of time. and we also know that the absolute level of both gdp and market sector output fell in real terms in september and october. it is of course early days to draw strong conclusions either way, but to come back to the need to read between the lines, it underlines the importance of understanding what kind of underlying shock might be driving that slowing. chart 5 : the news in the gdp data has become negative one - month ahead forecast errors for gdp and market sector output ( a ) source : bank of england ( a ) chart shows the difference between monthly growth outturns and one - month ahead forecasts, cumulated since november 2023. one obvious step, which can give at least a partial view, is to look at the behaviour of nominal variables – if inflation looks to be increasing at the same time as real activity is slowing, that tentatively points to a supply shock rather than downside news in demand. chart 6 plots the cumulative news in headline and core inflation in recent months. the picture is messy, but it looks tentatively like demand might have been weakening over the past six months or so, up to the last couple of data points. chart 6 : the news in the inflation data has been volatile one - month ahead forecast errors for core and headline inflation ( a ) source : bank of england ( a ) chart shows the difference between monthly inflation outturns and one - month ahead forecasts, cumulated since november 2023. a more sophisticated cross check using a model built by bank staff confirms that demand shocks may have turned negative in q3 of this year, having been more positive at the start of the year ( chart 7 ). supply and demand shocks are not mutually exclusive, so there could now be a weakening in both going on at the same time. but trends in supply are particularly uncertain at the moment and so it is difficult to identify where exactly a supply shock could be coming from. [ 23 ] this uncertainty complicates the appropriate policy response. chart 7 : distribution of shocks hitting the economy estimated uk and global demand shock probability distributions by quarter ( a ) source : bank of england ( a ) chart shows the estimated

such as leisure and holidays, behaves rather differently from sales of goods on the high street. so retail sales are not always a good guide to movements of consumer spending as a whole. for those reasons we should recognise that the true meaning of the christmas story will not be revealed until easter - or possibly much later. the monetary policy committee is more concerned to discern the meaning of the path of consumer spending over a longer time horizon. for some years the volume of consumer spending rose much faster than its post - war average. from 1997 to 2001 it rose at an average annual rate of about 4 %, and calendar year growth was last below 2 % in 1995. we are not so much a nation of shopkeepers as a nation that keeps shopping. behind this growth was a steady rise in real incomes, driven by increases in employment and falls in the prices of imported goods. those price falls followed the rise in sterling in the second half of the 1990s, and the increase in cheap imports of manufactured goods, such as textiles, toys and electronic goods, from china and other emerging market economies. over the past three years, however, consumer spending has decelerated and its growth has fallen to a more sustainable rate, close to its post - war average. the slower pace of consumption growth was the result of real income growth returning to a normal rate. it is striking, as the monetary policy committee has said before, that for a number of years, and despite the volatility of house price inflation, the saving ratio of households has been rather stable. some commentators are exercised by the possibility of a rise in household saving and hence a further slowing of consumer spending. their concern is that since consumption is the largest component of total demand, the path of consumer spending is crucial to the outlook for output and inflation. such concerns about the short run are indeed analysed carefully each month by the monetary policy committee, and the results of that analysis feed into our monthly interest rate decisions. visits like this give me the chance to listen to you and learn from you and other businesses about what is happening on the ground - not just in the retail sector but in manufacturing and services more broadly. and my visit is the tip of an iceberg because we have a permanent agency in the north west - staffed by members of the bank who live and work here. but i want to step back from the immediate conjuncture and look further ahead. more relevant for our future prosperity is the question not of whether we might