UK consumer confidence expected to trough on falling inflation -UPDATE

Date: Thursday 19 Jan 2012

Lender Nationwide’s consumer confidence index for the month of December slipped to 38 points, from 40 the month before.

That is the second lowest level on record since the survey started in 2004.

The main factor behind the retreat was a drop in households’ expectations for the first half of the year. The consumer expectations sub-index fell to the 50 point mark, from 55 in November.

This even if the so-called ‘spending index’ stayed put at 77, while the ‘present situation’ sub-index ticked up to 19, from 18.

Once again, the low levels of consumer sentiment were attributed to factors such as: high inflation, slow wage growth and rising unemployment.

Commenting on today’s data economists at Barclays Capital are commenting that, “(…) The GfK NOP consumer confidence index also fell in December, taking it to its lowest level since February 2009. Recent months have seen the labour market outlook deteriorate, while worries over the euro area situation have mounted. However, inflation is on a clear downward trend, easing the pressure on real household incomes. We expect the outlook for consumers to stabilise in coming months, barring further downside news, and as a result we think that consumer confidence is probably at or close to its trough.”

AB

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