If the professional investors take a while to adjust ordinary consumers can be forgiven if it also takes them a

If the professional investors take a while to adjust, ordinary consumers can be forgiven if it also takes them a while to cotton on.This may now be happening. Charterhouse, which drew attention to this surge in its latest economic quarterly, reckons the process started to reverse in the latter part of last year The good Christmas will have helped. I am more disturbed by the seeming inability of the retailers to live with lower stocks in general. The development of "just in time" management has pervaded manufacturing but not, it seems, distribution. That really is surprising, for you would imagine that among the most significant beneficiaries of the IT revolution are the retailers: they have gained the ability to know precisely what item is sold at what time and in what quantity in a way that would have been unthinkable before electronic tills came into use. Either the figures are wrong - always possible but surely unlikely - or retailing as a whole is failing to use properly its array of electronic kit.This is not going to continue. It is not going to continue because shoppers will not allow it to do so.

There are quite long lags in people's perception of inflation. Just as it took years for investors in gilt-edged securities in the 1950s to realise that inflation was eating away at their capital and switch their investment to equities, so now the financial markets demand a risk premium on fixed-interest securities even though inflation prospects seem better than they have done for perhaps 40 years. Since the middle of 1994, things have deteriorated further with a sudden surge in retail stocks, which is hard to explain except in the simple terms that they called the market wrong.That can be corrected. The two charts show a very different pattern in stock control in manufacturing and retailing, with the trend of manufacturers' stocks heading steadily downwards and only making a small blip up last year, but with retailers not showing any corresponding decrease through the second half of the 1980s, if anything the reverse. But elsewhere there is a squeeze, and since there seems to be more of a squeeze than there was during the recession, that may well be lottery-related.Next, retailers seem to have made a collective error in forecasting demand.

Contrary to popular opinion, some areas of consumer spending are doing very well at the moment: car sales shot up in the last quarter of last year, and passengers on the airlines are running about 8-10 per cent up year-on-year. And the six-hours- a-day deal is probably the optimum from a profitability point of view, for it enables most potential shoppers to buy what they want while adding the minimum of additional labour cost to the stores' wage bill.But while the more efficient use of floorspace means that fewer new stores will have to be built to meet any particular level of demand, in the short- run the effect of extra trading hours is the same as a sudden increase in capacity without any corresponding increase in sales. If you can use that capacity, fine; but it is not much fun if you cannot.Then there is the lottery, which has undoubtedly hit some of the low- ticket items such as sweets, and has cut the overall rise in retail sales. Sunday trading need not increase retailers' costs, indeed ultimately it should reduce them because their capital equipment, their trading space, is used seven days a week instead of six. For department stores or specialist chains - shoe shops and the like - the story has indeed been one of unrelenting pressure. But because when we think of retailing we think of the giants, we are less aware of the problems of the rest of the industry.Second, there are two specific blows that have struck retailers in the last 18 months - Sunday trading and the lottery - both of which require an adjustment. The big supermarket chains have still managed to increase their market share and maintain their margins, largely by displacing their smaller cousins.