LONDON (Reuters) – British consumer confidence fell this month to its lowest level since the immediate aftermath of the EU referendum, crimped by worries around rising inflation pressures, a survey showed on Friday.
Pollster YouGov and the Centre for Economics and Business Research (Cebr) said their gauge of consumer morale fell by one point to 108.1 in December, the lowest level since July.
The survey found a sizeable drop-off in optimism about household finances over the coming 12 months, with inflation set to rise sharply.
“The slow creep of inflation is starting to be both seen in the economy at large and felt in consumers’ wallets throughout the country,” Scott Corfe, director at Cebr, said.
“Despite things being better than many expected, looking ahead to 2017 there is a feeling that a slight slowdown is on the way.”
The YouGov/Cebr report chimed with a separate survey by GfK on Thursday which showed a deterioration in consumers’ outlook for 2017, despite morale improving overall.
Sterling has fallen more than 10 percent against the dollar since June’s EU referendum and while some retailers have raised prices already, others are expected to wait until after the highly competitive holiday season.
So far, the British economy has largely weathered the initial Brexit shock better than many economists had expected.
But a rise in inflation next year is likely to strain the spending power of households who have driven the recovery in the economy since the financial crisis of 2007-09.
Britain’s inflation rate in the 12 months to November stood at 1.2 percent and the Bank of England has previously said it expects it to peak at 2.8 percent in early 2018.
The BoE is prepared to let inflation run above its 2 percent target in 2017 but there are limits to tolerating the overshoot, Governor Mark Carney has said.
(Reporting by Adela Suliman, editing by Andy Bruce)