It’s been a bad week for anyone hoping for better economic news. Inflation crept up, job losses started to make the headlines and the governor of the Bank England admitted that the good times are over. Consumer inflation reached its highest level in 13 months driven by high food and fuel costs. The Consumer Prices Index (CPI) hit 3% in April, with the Retail Prices Index rising to 4.2%, putting an end to any hope of an interest rate cut in the foreseeable future. This prompted the quote from Bank of England governor Mervyn King that “the nice decade” was behind us – or to you and me the time of “non-inflationary consistent expansion”. He said inflation would probably stay above the government target of 2% for two years, hampering the economy, and that house prices were set to fall further. It was hardly designed to cheer up the public. But despite all this bad news, consumers are not yet panicking. In some ways they appear to be carrying on as normal, especially when it comes to leisure spending. There’s evidence to show that they are not forsaking their holidays and they are not giving up on eating-out. They may be tightening their belts but they seem reluctant to change their lifestyles radically – at least not yet. Latest results from the Restaurant Group, which saw a 5% increase in like-for-like sales, demonstrated that with the right offer the public will continue to go out in numbers. This last week, TUI, the holiday operator, reported a 9% increase in UK sales against last year, showing that people aren’t yet prepared to shut up shop and stay at home. What this seems to indicate is that what’s happening out in the wider consumer market is not just down to the economy. If the public is cutting back, it is not doing it uniformly. There are long-term structural changes affecting consumer habits and trends as well, and their importance should not be obscured by simply putting the blame for tougher times on the downturn. Parts of the retail sector are being squeezed as much by the migration of shopping to the internet. The leisure sector has seen its own mega-shifts with the growth of eating-out and the decline in drinking-out, trends that started at least a decade back. Current evidence suggests that tightening domestic budgets are more likely to magnify rather than halt these changes in underlying consumer priorities. This might suggest that the eating-out sector is better placed than most to weather worsening economic conditions – but then again. The real problem is that there is no certainty about the future. Bankers and economists can explain what’s happened and why the credit squeeze is real for both businesses and individuals, but whether we are passed the worst or if there is more bad news to come seems to be anyone’s guess. Creeping inflation and a rise in unemployment are probably the biggest enemies. If you believe the media headlines, then there’s little likelihood of imminent respite. The best advice would seem to involve planning for the worst, but doing your damnedest to keep your customers, the consumer, spending. The eating-out market may have an advantage, but it’s one that still needs leveraging. With banks and governments wrestling to have any influence on the macro trends, it’s the micro markets that operators need to really concern themselves with. Downturns and recessions always have a habit of having a Darwinian effect on businesses.