LONDON (Reuters) - British consumer morale edged lower in February as rising inflation following last year’s Brexit vote made householders warier about the outlook for their finances, surveys showed.
Two separate reports conducted by market research firms GfK and pollster YouGov pointed to increased financial pressure on households in the year ahead. That added to signs that consumer spending - the driving force behind Britain’s economy over the last few years - is starting to wilt as price pressures mount.
GfK’s monthly consumer sentiment index dipped to -6 from -5 in January, in line with forecasts in a Reuters poll of economists. For a second month running, Britons became less enthusiastic about splashing out on major purchases.
“Any momentum behind the post-Brexit, debt-fuelled, consumer spending boom now appears to be softening,” said Joe Staton, head of market dynamics at GfK.
The other survey, from YouGov and the Centre for Economics and Business Research (Cebr) think-tank, painted a similar picture. Its headline consumer confidence index slipped to 109.4 from 109.6 in January, leaving it well below its pre-Brexit levels.
Weaker perceptions of job security dragged the most on morale overall, but the outlook for household finances in the coming year also deteriorated.
“With inflation set to rise over the coming months and significant amounts of economic uncertainty, consumer confidence will struggle to return to the higher levels seen a year ago,” said Scott Corfe, director at Cebr.
A Reuters poll of economists last week suggested consumer price inflation will peak at around 3 percent towards the end of this year, up from 1.8 percent in January [ECILT/GB].
The Bank of England forecasts household incomes will cease growing in inflation-adjusted terms later this year, and says it will keep a close eye on the extent to which households will seek to bridge the gap by borrowing more.
A survey by Lloyds Bank, which was conducted in January but published on Tuesday, also showed a “significant” decrease in the proportion of consumers believing that they will have more money left over after household bills had been paid.
The outlook for wages is key for spending by households, who have driven Britain’s economy since the Brexit vote.
And a separate survey from jobs search engine Adzuna showed the average advertised salary fell 0.8 percent year-on-year to 32,420 pounds ($40,324).
Last week’s Reuters poll of economists suggested economic growth will slow this year to around 1.5 percent, down from 1.8 percent in 2016.
Prime Minister Theresa May has said she wants to trigger formal Brexit negotiations - beginning a two-year countdown to leaving the EU - by the end of March.
Writing by William Schomberg; editing by John Stonestreet, Larry King