UK Consumer Sentiment Drops to Match Post-Brexit Low: GfK

-July GfK Consumer Confidence Index -12 Vs -10 June

By Jamie Satchithanantham

     LONDON (MNI) - Consumer sentiment returned in July to the 26-year low set

in the direct aftermath of the UK's vote to leave the European Union, with many

key components in line with the post-Brexit levels set a year ago, a GfK survey

found Friday.

     The GfK May Consumer Confidence Index fell to -12 from -10 in June, one

point below the MNI median of analysts' forecast of a one point slip to -11.

Four of the five components that make up the headline index deteriorated, with

households increasingly pessimistic over the general economic landscape and the

idea of making a major purchase.  

     July's two point fall in the overall index meant confidence among UK

households has fallen to a level not seen since last July's 11-point drop from

-1 to -12, a matter of weeks after the UK had voted to exit the European Union. 

     This month's report saw households' assessment of the general economic

situation over the past year decline six points to -31, six points below last

July's level, while their assessment of the next 12 months dropped five points

to -28, just five points shy of the level set a year ago. 

     The Major Purchase Index, measuring consumers' willingness to make a

significant outltay, entered negative territory in July, dropping 2 points to

-1. This was after the index dropped 8 points in June and in July it dropped to

just one point adrift of last July's outturn. 

     The only component to strengthen in July was the indicator gauging

household finances over the next year. The respective indicator rose two points

to +2 in July to half offset June's four point fall to 0. This remains 3 points

above the level recorded last July. 

     The Savings Index, not a component of the headline composite index, rose

one point to +5 and, together with the slip in the major purchases index, points

towards consumers potentially reigning in consumption. 

     Friday's data were one of the last released before 'Super Thursday' when

the Bank of England will publish the year's third Inflation Report and latest

monetary policy decision.

     Amid falling real income growth and underwhelming GDP growth, Friday's GfK

result will aid those suggesting conditions are not currently primed for

tightening in policy.       

--MNI London Bureau; +44 203-586-2226; email: jamie.satchithanantham@marketnews.com

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