Brexit Inflation Gives British Consumers the Jitters

  • Measure of Britons’ finances drops to lowest level since 2014
  • Rising costs in services industry to prompt prices rises: CBI

Pedestrians cross the road outside a Hennes & Mauritz store on Oxford Street in London.

Photographer: Luke MacGregor/Bloomberg

U.K. consumer confidence slipped to its lowest level since immediately after the Brexit referendum as accelerating inflation unnerved households.

An index compiled by YouGov Plc and the Centre for Economics and Business Research declined to 107.9 this month. That’s the weakest reading since July, just after Britain’s vote to leave the European Union, but above the 100 level that shows more consumers are confident than not. Households’ view of their financial situation in the past month dropped to the lowest since the end of 2014, while their expectations over the next year also decreased.

The report shows that rising prices, partly driven by the fall in the pound since the Brexit vote, is hitting Britons’ pockets and causing a slowdown in consumer spending. A separate survey of services companies by the Confederation of British Industry released on Friday indicated more inflationary pressure in the pipeline after surging costs prompted businesses to plan further price hikes.

“The most concerning aspect in the numbers is the continuing decline in people’s household financial situations,” Nina Skero, CEBR’s head of macroeconomics, said in an emailed statement. “Both forward and backward-looking measures are at their lowest level for a number of years and it doesn’t take much for a tightening of purse strings to lead to a slowdown in the economy.”

The slackening of momentum may now also be hitting Britons’ perceptions of job security. The proportion of people saying they feel secure in their employment dropped to its lowest level since April 2013, YouGov and the CEBR said. At the same time, the CBI’s survey showed that firms costs per person employed are surging at the fastest pace in almost nine years, cutting into profits.

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