LONDON -British consumer morale has fallen to its lowest since February, when the country was under heavy COVID-19 restrictions, due to worries about the economic outlook and about rising prices, a Bank of America report showed on Friday.
The survey chimed with other gauges of consumer confidence in Britain that have suggested a growing cost-of-living squeeze has started to drag on the economy’s recovery from the COVID-19 pandemic.
The readings follow disarray in Britain in recent days as a shortage of truckers left fuel pumps dry across much of the country and a spike in European wholesale natural gas prices raised the prospect of a surge in utility bills.
“Our proprietary UK consumer confidence indicator continued to drop over the past two weeks, reaching the lowest since February on our 7-day moving average,” Bank of America economist Robert Wood said in a note to clients.
The survey showed inflation expectations rose by 60 basis points from August, with almost a third of Britons now expecting inflation above 5% in five years’ time.
Bank of England officials are trying to gauge whether higher inflation expectations pose a risk to its 2% inflation target over the medium term.
Some policymakers are concerned that investors and consumers could lose confidence in the central bank’s ability to contain inflation, raising the prospect of higher interest rates even as the economy is slowing.
Earlier on Friday, a separate survey showed British employers increased pay for new staff by the most since at least the 1990s.
But the Bank of America data showed little sign of a damaging 1970s-style wage-price spiral. Expectations for pay growth in the BofA survey showed little sign of change and remained close to pre-pandemic norms.