Consumer confidence is lowest since Brexit vote aftermath, survey finds – The Guardian
The monthly barometer of consumer mood from the market research firm GfK dropped to its lowest level since the aftermath of last summer’s EU referendum.
Based on polling of 2,000 people before and after the inconclusive general election, the index hit -10 for June. That was down markedly from -5 in May and worse than forecasts for a -7 reading in a Reuters poll of economists.
All measures in the survey deteriorated in June: people’s view of their personal financial situation over the past year and over the coming year; their view of the general economic situation; and their appetite for making big purchases such as furniture.
The report follows official figures showing that pay is falling again in real terms thanks to a combination of lacklustre wage growth and rising inflation. Inflation has been rising on the back of a weak pound since the Brexit vote, which has made imports to the UK more expensive.
Joe Staton at GfK noted that the overall index was just two points above the -12 reading in July last year when confidence tumbled after the referendum.
“The scores on the general economic situation looking forward and back 12 months are now particularly weak,” Staton added.
“Strong consumer spending has propped up the economy since last June but now the twin pressures of higher prices and sluggish wage growth are squeezing household finances and adding to widespread fears of a Brexit-induced economic slowdown.”
The UK economy confounded gloomy forecasts for a sharp slowdown after the Brexit vote but lost momentum at the turn of the year. Economic forecasters widely expect that growth this year will be significantly lower than in 2016 as Brexit talks weigh on business confidence and higher inflation squeezes consumers.
There were further signs of consumer worries in separate polling by Lloyds Bank published on Friday. It found the proportion of people feeling good about their personal finances fell last month as rising prices and slow wage growth took their toll.
The proportion of consumers reporting a positive assessment of their personal financial situation dipped to 63% in May from 65% in April.
The survey also showed a rise in the proportion of people feeling pessimistic about inflation after it hit a four-year high in May. The proportion of people who said they had money left over after they had covered all monthly outgoings fell to 80% in May from 84% in April.
“Inflation continues to be front of mind when people consider the health of their personal finances. With consumers now reporting a significant impact on their disposable income, there’s simply less money left over each month for buying the occasional treat,” said Robin Bulloch, managing director at Lloyds.
“And while recent falls in forecourt petrol prices may provide some relief, it’s the rising cost of food and drink which continues to really stretch the purse strings. With little change in these broad trends likely in the short term, households should prepare for a further squeeze on their spending power in the months ahead.”