Consumer confidence dips in July as inflation bites

Consumer confidence dipped in July as inflation and economic contraction weighed on household sentiment, new figures from the British Retail Consortium (BRC) show.

According to the BRC-Opinium Consumer Sentiment Monitor, expectations for the UK economy over the next three months fell to -33, down from -28 in June. Forecasts for personal finances also declined, from -5 to -7.

At the same time, expectations for personal retail spending increased slightly to +3, from +2 the previous month. Overall spending expectations rose from +12 to +16, while saving sentiment improved modestly to -3, from -4 in June.

Helen Dickinson, chief executive of the BRC, said: “With the UK economy shrinking for the second consecutive month, it is little surprise that consumer confidence fell in July. Rising inflation, particularly for food, has put more pressure on personal finances, increasing the cost of living. This has caused spending expectations to rise, particularly for groceries, as households anticipate higher prices at the till.

“Despite fierce competition between retailers, retail inflation has risen steadily over the last nine months as a result of the Chancellor’s last Budget, which significantly increased employment costs. Further tax rises hitting the retail industry at the next Budget would likely fan the flames of inflation as retailers are forced to increase prices.”

She added: “The Chancellor has the opportunity to support households and high streets: the proposed business rates reforms could make the system fairer, provided the government ensures that no store pays more as a result.”

The survey was conducted by Opinium on behalf of the BRC between 8 and 11 July.