Consumer confidence falls back to last year’s post-Brexit low

A summer lift in retail sales is not expected to hold up in the longer term
A summer lift in retail sales is not expected to hold up in the longer term

Consumer confidence has fallen to the level last seen in the immediate aftermath of the Brexit vote.

The long-running GfK Consumer Confidence Index fell a further two points in July after a five-point dip in June to hit its post-Brexit low of July last year.

The survey also found expectations for the UK’s general economy over next 12 months have dropped five points.

The measure of changes to personal finances over the last year fell one point to minus two - one point lower than this time last year - although the forecast for the next year increased by two points.

The major purchase index, an indication of consumer confidence in buying big ticket items, decreased two points to minus one, one point higher than July 2016.

Joe Staton, head of market dynamics at GfK, said: “The economic picture across the UK remains confusing and this mood is reflected in the overall index score, which is down by five points.

“It’s the sharp drop in confidence about the UK’s general economy - both looking back one year and ahead one year - that is driving the fall.

“While there’s a small bounce in consumer views of personal finance looking ahead, that’s the only measure that’s up.

“All bets must now be on a further drift downwards in confidence.”

The findings come in contrast to a survey on Thursday which reported that retail sales exceeded expectations to grow at a healthy pace in the year to July.

Grocery and clothing sales drove the growth, while orders placed on suppliers rose at a solid pace for a second consecutive month, the CBI Distributive Trades Survey found.

“The warm summer has added a sizzle to our high streets as shoppers defied expectations, with sales growth in clothing shops and grocers driving overall performance,” said the CBI’s Anna Leach.

“But while retailers expect a similar pace of growth next month, the factors underpinning their sales growth are more shaky.

“Although employment is strong, real incomes are falling in the wake of higher inflation, and that’s expected to feed slower consumer spending growth ahead.”