UK consumer morale sinks to four year low: GfK

21 Dec, 2017 9:00 am

LONDON (Reuters) – British consumer sentiment fell to its lowest level in four years this month as inflation-squeezed households took a gloomier view of their personal finances, a long-running survey showed on Thursday.

The GfK consumer confidence index slipped to -13, its lowest since December 2013, from -12 in November, bucking expectations in a Reuters poll of economists for it to hold steady and extending a downward trend seen for most of 2017.

GfK said Britain’s departure from the European Union and the Bank of England’s first interest rate rise in a decade were weighing on consumers, who felt their personal financial situation had worsened and they were less keen to make big purchases.

Inflation also hit its highest in nearly six years at 3.1 percent in November — easily outstripping lacklustre pay growth — and a separate survey showed on Wednesday that households’ expectations for future inflation were the highest since 2013.

“We need to see several issues move on before the downward trend of the consumer mood changes,” GfK analyst Joe Staton said, citing Brexit and the path of BoE rates in particular.

“None of this will be resolved quickly so there’s every likelihood that 2018 will take us lower.”

Britain’s economy has slowed this year — in marked contrast to other major economies — after initially performing well in the months after June 2016’s Brexit vote.

IMF managing director Christine Lagarde told Britons on Wednesday that her warnings about the financial cost of voting for Brexit were being borne out, and said Britain’s economy was only likely to grow by 1.5 percent next year.

Retail sales data so far have been mixed in the crucial pre-Christmas season. Official figures for November beat economists’ expectations, and the Confederation of British Industry said spending growth in early December was solid, despite tough underlying trading conditions.

The GfK survey, conducted on behalf of the European Commission, polled 1,998 Britons between Dec. 1 and Dec. 15.

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