The crash in the pound and discussions about foregoing the single market are taking a toll on consumers
Talk about “Hard Brexit” and the resultant slide in the value of the pound has seen consumer drop to its lowest level since July’s post-referendum slump.
October’s YouGov/Cebr Consumer Confidence Index stands at 109.3 – a fall of -2.2 points in the past month. With the exception of a severely depressed figure in July - the immediate aftermath of the EU vote - the Index is at its lowest level since September 2013 when it also stood at 109.3.
We collect consumer confidence data each day with 6,000 interviews a month. Respondents are asked about household finances, property prices, job security and business activity, both over the past 30 days and looking ahead to the next 12 months.
Overall confidence has fallen because of a decline in people’s household financial situations. Consumers have already noticed increasing prices after the government signalled it would seek a ‘hard” Brexit and the exchange rate slumped as a consequence. People’s household financial situations over the past 30 days has suffered its greatest month-on-month fall since December 2014.
It is likely that the decline in the value of sterling will push up the price of a wide range of imported goods – including food – next year. At the same time, earnings growth shows little sign of picking up meaning there will be a further squeeze on family finances in 2017. The result is that, with the exception of July’s figure, people’s expectations of their household finances over the coming 12 months have not experienced a bigger monthly decline since January 2011.
In all, seven of the eight underlying metrics of the Consumer Confidence Index have fallen over the past month, including both the backward and forward-looking house price measures. The only one increasing in October was people’s expected job security over the coming year.
Image from PA