By Xavier Fontdegloria
British consumers turned slightly more pessimistic in December as high inflation and news about the coronavirus Omicron variant clouded the short-term outlook for both the economy and personal finances.
GfK’s consumer-confidence barometer fell to minus 15 in December from minus 14 in November. The decline is less steep than the minus 18 consensus forecast from economists polled by The Wall Street Journal.
Three out of the five measures that make up the consumer-confidence barometer decreased in December compared with the previous month, while two increased. The falls were concentrated in the forward-looking indicators, the data showed.
The major purchase index–which gauges demand among shoppers–fell three points, signaling that consumers are less inclined to make major purchases during the countdown to Christmas, GfK’s client strategy director Joe Staton said.
“News about the Omicron variant could not have arrived at a worse time for festive celebrations,” he said.
Consumers’ views on the economy and on their personal finances also worsened slightly in December, driven by concerns over the higher cost of living and the prospect of looming interest rate increases.
Inflation in the U.K. accelerated in November to 5.1%, its fastest annual rate in more than a decade, propelled by supply-chain disruptions and higher energy costs. The Bank of England on Thursday raised its benchmark interest rate to 0.25% from 0.1% for the first time since the pandemic began in an attempt to curb inflation.
Consumer confidence isn’t likely to recover soon due to the upcoming pandemic-related restrictions and high uncertainty, Mr. Staton said. “We end 2021 on a depressing note and it looks like it will be a bleak midwinter for UK consumer confidence, possibly with new Covid-19 curbs and little likelihood of any real uplift in the first months of 2022,” he said.
Write to Xavier Fontdegloria at [email protected]