Consumer morale drops in June
Consumer confidence slipped in June as a boost from the royal wedding and a run of sunny May bank holidays gave way to harsher economic realities.
The GfK/NOP consumer confidence index fell four points to -25 this month, giving back almost half of June’s near-record 10 point rise.
All five categories in the index registered declines. People’s perception of the economy saw the biggest deterioration, followed by their expectations for how their own finances would shape up over the coming year.
The decline was slightly bigger than the drop to -24 economists had forecast and will disappoint Britain’s coalition government whose five-year austerity programme is only starting to kick in.
“It was almost inevitable that there would be a drop in confidence in June following last month’s unique, feel-good circumstances of public holidays and the royal wedding,” said Nick Moon, Managing Director of GfK NOP Social Research.
“What will disappoint the government is that the drop is so large – wiping out half of last month’s gain and leaving consumer confidence lower than it was at any point in 2010.”
Concern about weak consumer demand is a key reason why the Bank of England has kept interest rates at a record low 0.5 percent for the past two years, despite inflation soaring to more than double its 2 percent target.
The survey was conducted with a sample of 2,002 people from June 3 to June 12 by GfK NOP on behalf of the European Commission.