Consumers wary about creeping inflation in 2017 hitting household budgets

Oliver Gill
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Worrying times ahead? A poll suggests consumers are concerned about what 2017 will bring for household finances (Source: Getty)

Consumer confidence has flopped to its lowest levels since the Brexit vote with inflationary pressures starting to bite, according to leading group of economists.

Concern about what the next 12 months will bring for household finances drove confidence to down by one point in November – it is at its lowest levels since July, a poll by YouGov and the Centre for Economics and Business Research (Cebr) revealed.

Read more: Businesses are confident about the UK economy says survey

Scott Corfe, a director at Cebr, said Britain's ability to ride the rocky economic fall-out of the Brexit vote in 2016 may be less controlled next year.

"“The tail end of the year has seen steady house prices, a low unemployment rate, and solid consumer spending," he said.

While this performance defies many doom-mongers, the slow creep of inflation is starting to be both seen in the economy at large and felt in consumers’ wallets throughout the country.

Despite things being better than many expected, looking ahead to 2017 there is a feeling that a slight slowdown is on the way.

(Source: YouGov/Cebr)

The poll revealed consumer confidence is three points lower than at the start of 2016, something Stephen Harmston, the head of YouGov reports called "a pretty robust performance".

"However, when you look at the details it is clear that expectations for both property prices and household finances have declined notably over the course of the year, in both instances suffering their biggest yearly declines since 2010. Consumer sentiment has evidently taken a hit this year,” he said.

But a business bounce?

Although consumers may be concerned, a separate poll indicated business confidence had rebounded sharply at the end of November and first two weeks of December.

Read more: Eurozone consumer confidence rises sharply in November

Lloyds Bank's business barometer showed UK coroprate confidence had risen by seven points during December to 39 per cent – the highest level since March.

The latest monthly jump was driven by renewed confidence over the economy, having previously been hit in the wake of Donald Trump's victory in the US presidential election.

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Business confidence has rebounded after initial concern following Donald Trump's presidential victory (Source: Getty)

Read more: Resilient British consumers grow more confident but economy worries remain

Christmas trading has held up well according to the poll of 300 companies by Lloyds. Retail sentiment was nudged up one point, business and other services up nine points and the industrial sector jumped by six points.

The bank's senior economist Hann-Ju Ho stressed that unlike the consumer confidence in the YouGov/Cebr poll "economic optimism in our December survey has recovered near to levels seen at the start of the year".

He added: "In addition, confidence this year has held up much better than it did during the global financial crisis.”

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