UK consumer confidence slides as inflation worry mounts: Bank of America

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FILE PHOTO: Shoppers cross the street in Oxford Street in London, Britain August 14, 2016. Businesshala/Peter Nichols/File photo
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LONDON (Businesshala) – British consumer morale has fallen to its lowest since February, when the country was under heavy COVID-19 restrictions due to concerns about the economic outlook and rising prices, a Bank of America report showed on Friday. .

The survey ties in with other gauges of consumer confidence in the UK, which have suggested the squeeze on rising costs has begun to drag on the economy’s recovery from the COVID-19 pandemic.

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In recent days a shortage of truckers in Britain has dried up fuel pumps across much of the country and a rise in European wholesale natural gas prices raised the prospect of a rise in utility bills.

“Our proprietary UK consumer confidence indicators continued to fall over the past two weeks, reaching the lowest level on our 7-day moving average since February,” Bank of America economist Robert Wood said in a note to clients.

The survey showed inflation expectations have risen 60 basis points since August, with almost a third of Britons now expecting inflation to exceed 5% in five years’ time.

Bank of England officials are trying to find out whether higher inflation expectations pose a risk to its 2% inflation target in the medium term.

Some policymakers are concerned that investors and consumers may lose faith in the central bank’s ability to control inflation, increasing the prospect of higher interest rates even as the economy slows.

Earlier on Friday, a separate survey showed British employers had increased wages for new workers the most since at least the 1990s.

But Bank of America data showed little sign of harming the 1970s-style pay-price spiral. Wage hike expectations in the BofA survey showed little sign of change and remained close to pre-pandemic norms.

Reporting by Andy Bruce; Editing by William Schomberg


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