Daily Management Review

Fall In Consumer Confidence In UK Due To Inflation Worries, Finds Bank Of America Report


Fall In Consumer Confidence In UK Due To Inflation Worries, Finds Bank Of America Report
Worries about the economic outlook of the United Kingdom and concerns about the continued rise in prices have pushed down British consumer morale to the lowest point since February this year when the country was placed under stringent Covid-19 restrictions, claimed a report prepared by the Bank of America on Friday.
The recovery of the British economy from the Covid-19 pandemic hit is now potentially being dragged down and slowed because of an increase in cost-of-living which was indicated by some of the other gauges of consumer confidence in Britain, the survey based report also claimed.
In recent days, the British economy has been pushed in a sort of disarray with the country being hit by a shortage of truck drivers resulting in a fuel shortage at fuel pumps throughout much of the country as well as a surge in European wholesale natural gas prices of which prompted many to predict an increase 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.
Compared to August, there was a rise by 60 basis points in the inflation expectations in Britain currently, showed the survey, which found that inflation in the country to go past 5 per cent for the first time in five years is being expected by about one-third of Britons.
There are also debates currently ongoing among the Bank of England officials about whether the current spate of high inflation growth and expectations of continued growth in the future threatened the BoE’s target of pegging inflation at 2 per cent in the medium term.
There can also be a loss of confidence of investors and consumers in the ability of the central bank to contain inflation, according to concerns of some policymakers, as a continued inflationary environment increases the possibility of higher interest rates even in the face of a slowdown in the economy.
Employers of the UK have increased pay for their new staff members by the most since at least the 1990s, a separate survey released earlier on Friday showed.
However there were few signals of a damaging 1970s-style wage-price spiral in the report by the Bank of America. Little sign of change in the expectations for pay growth was shown in the BofA survey and this expectation was steady close to its pre-pandemic levels.