British consumer sentiment fell for the first time in four months in February, a survey by Growth for Knowledge (GfK) revealed today.
The survey showed that households took a more negative view of their recent personal finances and broader economic outlook.
The GfK consumer confidence index, the longest-running survey of its kind in Britain, dropped by 2 points to -21 in February.
This fell below all forecasts in a Reuters poll of economists which had predicted a small rise to -18.
Last month, the survey revealed a two-year high in consumer confidence.
‘Understanding The Financial Mood’
The only component of the index that did not fall was households’ expectations for their personal finances over the coming year.
The GfK client strategy director Joe Staton said, “This metric is key to understanding the financial mood of the nation because confident householders and more likely to spend despite the cost-of-living crisis.”
All components of the index are up compared to last year. In early 2023 inflation was just off a 41-year high of 11.1%.
Market turmoil under the short leadership of Liz Truss was also fresh on many consumer’s minds.
Truss’s successor Rishi Sunak is due to announce the budget on 6 March.
Sunak hopes it will help narrow the Conservative Party’s large polling deficit compare to the Labour Party.
He is expected to call a national election later this year.
Household consumption in the UK has still not reached pre-pandemic levels when adjusted for inflation.
This is reflected in some other European nations, but contrasts with a growth in living standards in the United States.
Consumer price inflation was 4% in January. The Bank of England (BoE) expects it to return to its 2% target during the second quarter of the year due to falling energy prices.
However, the BoE is not prepared to cut interest rates from their 16-year high of 5.25%.
The bank worried that rapid wage growth and services price inflation will drive up general inflation to 3% later in 2024.
