Figures from the Bank of England showed that the growth in consumer credit is slowing as shoppers become more cautious about the future.

The figures will strengthen the case for another cut in interest rates when the Bank of England's Monetary Policy Committee (MPC) meets again in early December.

The amount of credit taken out by British consumers grew by £1.18bn in October.

That is 6% lower than in September, when consumer credit increased by £1.25bn.

Mortgage lending is also slowing down. Net mortgage lending of £2.22bn, was below the £2.33bn recorded in the previous month.

In all, consumers have outstanding borrowings of £99bn in consumer credit, and £453bn in mortgages.

No inflationary threat

However borrowing is not slowing as fast as analysts expected.

The figures were slightly puzzling given the official figures that show an even sharper slowdown in retail sales for the same period.

Even so City observers were sceptical that the figures represented a serious inflationary threat.

Michael Saunders of Salomon Smith Barney suggested that consumers may be borrowing more than forecast because of the existence of so many interest-free credit deals by retailers, who are anxious to drum up more business.

He expects the Bank of England to cut interest rates by another 0.25% when the MPC meets next week.