British consumer confidence improved marginally in July but remains well below levels from before the Brexit vote in June last year, weighed down by nervousness around household finances, a new poll has found.
The consumer confidence index created by Yougov and the Centre for Economics and Business Research (CEBR) rose to 107.3 in July, up from 107.1 in June, according to the latest report published today.
A score over 100 means more consumers are confident than not, but the last time the index was below 108 for two consecutive months was in the summer of 2013, a time of weak economic growth for the UK.
Confidence took a steep dive last month after the General Election delivered a hung Parliament, undermining certainty as the UK approaches Brexit.
Prospects for consumers have been damaged in the past year as inflation has steadily risen because of the fall in the value of sterling. The pound remains around 14 per cent less valuable relative to the euro since before the referendum.
The pass-through of the sterling devaluation has pushed up inflation at a time when wage growth remains anaemic. While inflation moderated in June to 2.6 per cent that remains well above wage growth, which reached only 1.8 per cent in the year to May.
Faced with this real wage squeeze the prospects for household finances have slumped to their lowest level since December 2014, according to the Yougov/CEBR poll.
Consumers expectations for house prices also remain depressed, with the expectations for house prices in the year ahead hitting their lowest point since May 2013.
The UK economy faces a “tough test over the next year,” according to Nina Skero, CEBR head of macroeconomics.
She said: “These figures suggest that while the shock of the election result may have been absorbed, a lot of uncertainty remains.
“With the recent inflationary pressures, the decline in people’s household finances over the past month is to be expected. However, what could be as troubling for many consumers over the coming year is the cooling off of property market expectations over the next 12 months – if house prices fall once again then tricky economic conditions would get even more difficult.”