Consumer confidence slipped back slightly in October, adding to the impression of a growing softness around households’ spending intentions ahead of Brexit and in the face of an expected interest hike from the Bank of England.
GfK reported that its consumer confidence index fell to -10, down from -9 in September.
The index slumped dramatically to -12 in the immediate wake of the Brexit vote in June 2016, but bounced rapidly back the following month as panic abated.
However, the index has been broadly trending down since then, likely reflecting a squeeze from higher inflation stemming from the slump in the pound in the wake of the referendum.
Respondents’ view of the general economic situation over the next year deteriorated, as did the GfK major purchase index.
“As concerns about the wider economic prospects for the UK economy dampen our outlook, consumers are showing no real ‘get-up-and-go’,” said Joe Staton of GfK.
“We are now entering the crucial Christmas trading season and it will be a testing time for retailers and consumers alike. Will consumers carry-on shopping or start to cut-back in the face of mounting pressure on our pockets?”
Consumer spending has propped up the overall economy since the summer of 2016, as business investment and net trade have delivered little growth.
Despite this, GDP growth has fallen from the 0.6 per cent rate seen at the end of 2016.
It grew by 0.4 per cent in the third quarter of 2017, having expanded by 0.3 per cent in both the first and second quarters.
Despite soft household spending sentiment, the Bank of England is widely expected by financial markets to hike rates to 0.5 per cent on Thursday, in order to rein in inflation, which hit 3 per cent in September.
This would be the Bank’s first rate increase in a decade.